Missed payments can be a significant factor in failing a credit check.
What's included in a credit report / check?
Your credit report will highlight a number of sections. The main ones are listed below, and they will have a bearing and form part of the decision on whether you pass or fail a credit check.
Each tenant has their own credit score, which reflects their financial reliability and is used by landlords to assess their suitability.
County Court Judgement letter
County Court Judgements (CCJs) are a key part of the check for tenants. It is a type of court order that might go against your name if you owe money and have failed to repay it. If you think you might have CCJs against your name, then you can request a copy of your credit file from a credit reference agency.
Electoral or Voters Roll
This is a check that looks at whether you have registered to vote at a property you have lived in. By law you need to register on the electoral role. To check if you are registered, you need to contact your local Electoral Registration Office
A credit check will check to see if you are on the electoral roll, and if you're not, this may impact your chances of passing and separately your chances of getting credit, like a credit card.
Affordability
A credit check will also look at whether a tenant can afford to pay the rent for a property. A tenant’s income and expenditure will be looked at to see if they can meet the living costs involved with renting. Additionally, bank statements can be used to demonstrate a tenant's financial reliability and ability to afford rent by showcasing timely bill payments.
Adverse credit
This is a term used to describe someone whose poor credit history may show they have struggled to pay their debts. Late payments, arrears or defaults are all reasons that may lead to someone being described as having adverse credit.
Permission needed by the letting agent or landlord.
A letting agent or landlord will need to get your permission as an applicant to access your credit file, as tenant credit checks are a standard part of the rental application process. These checks are typically carried out by one of the big credit reference agencies. In the UK, the four big Credit Reference Agencies (CRAs) are Experian, Equifax, TransUnion and Crediva. The good news is that CreditLadder is the first way in which tenants can have their rent reported to all four of the main CRAs in the UK.
If you’re asked to pay this should set off alarm bells - they should be paid for by the letting agency or landlord. As a tenant you should not be paying for a reference - it is against the law to ask you to pay.
What if a tenant fails a credit check?
If you fail a rental credit check, all is not lost. You may still be able to rent the property you’re looking at by getting a guarantor - you can read more about this here
Getting in the best position to pass a credit check
There are a few things you can do to get a positive outcome:
Get on the electoral roll at your home address.
Ensure any bills in your name are paid on time and in full.
Check your credit file with the credit reference agencies to make sure the information and data on there is correct and up-to-date.
Make sure you are on the tenancy agreement at your current property.
The other part of the reference check
As well as the credit check, other criteria letting agents or landlords will look at are:
Do you have a reference letter from your previous landlord? A positive letter could support your chances of passing. References from previous landlords are crucial as they provide insight into your reliability as a tenant.
Your right to rent in the UK. More information can be seen here as your immigration status may impact your ability to rent.
A letter from your company to confirm your salary and position.
Consistent and timely rent payments can positively influence your rental application, as they demonstrate financial responsibility.
In summary it’s a good idea to line everything up. Get yourself and anyone you might be moving with into the best possible position by following some of the advice we’ve shared in this article. And remember, if you fail a credit check, all is not lost - a guarantor might be able to help.
CreditLadder can help you improve your credit score
If you want to improve your credit position by reporting your rent payments, CreditLadder is the only way to improve your credit score and position across all four of the main Credit Reference Agencies in the UK, namely Experian, Equifax, TransUnion and Crediva. Building up a high credit score has a lot of benefits, including helping you access finance at better rates - this can also help save you money.
CreditLadder also runs a free mortgage application service in partnership with Tembo which will tell you how much you could borrow.
Remember the information provided in this article is for information purposes only and should not be considered as advice.
