Credit checks – what’s involved?

by Ed Firmin

Posted on Friday, November 6th, 2015 at 10:00

Credit checks and referencing are part of the process of screening tenants to help landlords and letting agents make a decision whether or not to rent to a particular person.

The last thing a landlord wants is to end up with a tenant who’s going to cause problems, who has a history of unpaid bills or other dodgy past dealings which could mean a headache. It also helps to weed out any identity fraud, for example.

But what’s involved in checking out a tenant before getting them to sign on the dotted line?

Well, not all of it involves credit checks and references. You can do your own research when they come round to do a viewing. There’s just no replacement for meeting someone face-to-face.

You’ll be able to ask them questions about why they are moving, whether they smoke (you’ll be able to smell it on their clothes probably if they do!), and also get a feel for things like reliability (did they turn up late?) what their personal appearance is like, if they are scruffy, how likely will it be for them to look after your property, what’s their behaviour like, are they respectful, shake hands, offer to take their shoes off, for example? All of these will help you gain a good impression of what they will be like.

If they pass this hurdle and are interested in taking up the property, then it comes onto the credit checks and references. Usually a letting agent will handle this process if you’re going to use them, and there are other companies who you can deal with direct that can handle tenant applications.

A credit referencing agency will be used as part of this process, which will let you know information such as:

  • Whether the person is on the electoral roll
  • Whether there are any county court judgements against their name
  • If they’ve ever been declared bankrupt
  • What credit accounts are against their name (mortgage, credit card, mobile phone contract, etc.) and whether these accounts are being kept in a good condition
  • How much credit they’ve applied for in the past 12 months
  • Whether they’ve been linked to any fraud in the past
  • Previous addresses held

In terms of references, then agencies will usually contact the references you have been provided with, and verify the tenant’s story. They tend to look at current employer and last landlord or letting agent.

All of this information will help you to judge whether you would like the tenant to be in your property on the basis of they are who they say they are, and how they manage their financial affairs.

Of course, the final decision is yours, if your tenants don’t pass the checks, but there’s a valid reason why, then you can still accept them if you feel they will be a good fit in your property. It’s also important to remember that students and overseas tenants may well fail credit checks, simply because they don’t have enough information on their file. Valid reasons for the fail, but not enough reason to reject them as tenants.

If you’d like some advice on how to select tenants, then I am more than happy to help. I do offer a tenant find service, so please get in touch if you would like to hear more.



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