How to pass a credit check
Most landlords or letting agents will run a credit check on you, which will usually give you a ‘risk’ rating from ‘low’ to ‘very high’, and you can bet that if you’re deemed to be high risk, it’s very likely the landlord will reject you. So how do you make sure your risk rating is as low as possible?
Avoid getting into debt – even by just pennies
If you don’t pay your bills and end up with a County Court Judgment (CCJ) it will stay on your file for six years and if a landlord sees you’ve got one of these, they’ll almost definitely show you the door. Avoid these by setting up direct debits to pay all your bills, including credit or store cards and any other loans. Remember that even owing a small amount, even just a few pence, could land you with a CCJ so don’t ignore even the tiniest bill.
….but get a credit card
Ironically, having no debt at all can be almost as bad as being slightly in the red because it means that you can’t prove that you’ve never missed a repayment. Crazy eh?! Get round this by applying for a credit card but make sure you pay off the balance every month.
Get a current account that accepts direct debits and facilitates faster payments
Tenants who pay by direct debit are less likely to forget or skip payments, so you’ll get Brownie points for having a current account and more if it allows faster payments.
Register on the electoral roll
You need to do this to prove where you live, especially if you don’t have a council tax bill in your name or you don’t have your name on the gas, electricity or water accounts. If you can’t prove where you’ve been living for at least the last 3 years, this will count against you.
Don’t switch jobs
Credit checks are usually carried out by insurance companies, which will want to sell to sell the landlord Rent Guarantee Insurance for tenants who pass their credit checks. For this reason, they are notoriously cautious and wary of any tenants who don’t have a stable career. Similarly, they will be wary if you’ve just recently changed jobs, especially if you’re still within your probationary period as there’s no guarantee you’ll be offered a permanent contract.
If self-employed, get audited accounts
You’re going to have to prove your income, possibly for up to three years, so get an accountant to audit your accounts and provide proof of your pre-tax earnings.
Don’t go overdrawn
You might be asked to show bank statements for the past three months to prove that your earnings cover your expenditure, so make sure you don’t overspend in the run up to applying for a new home.
Pay your rent, take care of your property, be nice to your landlord
Your current or previous landlord will be asked to provide you with a reference so make sure you don’t skip any rent payments and keep the property in tip-top condition. Also, make sure you’ve given your landlord notice that you’ll be leaving and ask if they’re happy to give you a reference before passing on their details to the letting agent or new landlord.
Dig out your ID
Landlords have a legal duty under recent changes to the Immigration Act to check that all new tenants have a right to live in the UK, so you’ll have to show them a copy of your photo ID. If you don’t have permanent residency within the EU, you’ll need to show your visa. Research shows landlords are significantly less likely to offer a property to someone who will take time to prove their Right to Rent in the UK, it’s good to have this handy when you view a property.
Any delays in supplying all the information you need for the credit check could cause the landlord or agent to find another tenant, so make sure you respond as soon as possible and chase up your employer and previous landlord for references.
If you fail a credit check, it’s not necessarily game over, here’s what to do.