Important Questions for Landlords About Credit Checks

Before allowing a tenant to rent one of your properties, it is essential that you feel comfortable they will be able to meet all their payments. The most common and reliable way of doing this is to run a credit check. It’s not a legal requirement but for your own peace of mind and avoid having to chase late payments or take legal action in the future, it’s highly advisable. Here’s what you need to know.

How do I Credit Check a Potential Tenant?

To simply perform a credit check on a tenant, you do so through a credit referencing agency. Experian, Equifax and TransUnion (formerly Callcredit) are the big three in the UK that are used by most. These will provide a good overview and credit score you can access, but for a more comprehensive check then it can be worth seeking a full tenant reference. This includes things like an employer’s reference and written landlord’s reference.

What Can I See?

Only publicly available data can be seen on a credit report by a landlord. Existing credit commitments such as mobile phone contracts, credit cards, different types of loans and other information is not included. However, you can see:

• County court judgements (CCJs)
• Tenant name and address
• Voter registration
• Insolvency records

There are now some credit checks that include historical rental data as well, that shows how well potential tenants have previously met their payments.

What’s Included in a Credit Check?

Along with being able to view the above, most credit reports include a variety of further information. Outstanding loan agreements, missed or late payments, an overview of the tenant’s financial history and a credit score will be present. However, only the person whose report it is and credit lenders such as banks can see the full financial history information. Personal details such as bank account balances and salaries are not included.

Which Credit Reference Agency Should I Use?

All three of the main credit reference agencies will provide you with reliable information about a potential tenant’s financial situation. They all use a similar method to provide a credit score for individuals but it’s important you understand the different credit score numbers and ranges they use, as these do differ. You could also use two or three to cross reference the results if desired.

Anything Else?

You always need a tenant’s permission to run a credit check or reference. If they refuse, then it could be a sign there is a potential issue and most landlords would likely not offer the property in such an instance. Often this is required in writing so can delay the process a little.

Credit checks are an important process for every landlord to run through and these questions and answers should provide a good overview.

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