This page was last updated on 1 November 2020.
What credit score is needed to rent a house
This article answers the most frequently asked questions about what credit score you need for renting a house.
The guide gives users expert advice and tips about:
- What a credit report and credit rating is
- Why landlords run credit checks
- The kind of problem you may have renting with a poor credit score
- Whether you can private rent with bad credit
So that you can get a clear sense of the extent to which your score will affect your property searches.
Topics that you will find covered on this page
You can listen to an audio recording of this page below.
What is a credit rating?
A “credit rating” or “credit score” is basically a tool that lenders and other institutions use to see whether or not you are creditworthy.
In other words, a lender uses your rating to calculate the risk involved with giving you loans, mortgages, or other forms of credit (such as mobile phone contracts, rental agreements, and credit cards).
Part of the reason your rating is important is because it affects how easily you can access these valuable services in the future. It can also result in smaller credit limits on your bank accounts, a higher interest rate you pay on your loans.
In the UK, a copy of your credit file is held by the three major credit reference agencies (CRA). These are:
Landlords can request public record info about your credit report and rating from the rating credit bureaus listed above.
Here is a video that you might useful.
What score do you need to rent a house?
Each landlord has a different requirement for credit scores. If you are applying to rent with a large established property manager, they will probably have a stricter tenancy agreement when it comes to credit rating. They are also likely to check the electoral roll to look into your background.
Meanwhile, a private landlord may not even request credit checks. Instead, an individual landlord may just be satisfied that you will pay the rent if you name a family member as a guarantor.
Is it hard to rent a home with bad credit?
Maybe. You may have trouble being accepted as a tenant if the credit records that your landlord can access show that you have had instances of bankruptcy or insolvency.
However, you might be able to come to an agreement despite a bad rating from your credit report. For example, you can list a guarantor as a co-signer or agree to pay a larger deposit when you apply.
The exact criteria will depend on the landlord. An important point to remember is that it will be easier to find a compromise when renting privately than through an agency or property office.
Can you private rent with bad credit?
Yes. It is ultimately the decision of the private landlord whether or not they will accept applicants as a tenant. There is no rule about the minimum rating you need for renting properties.
However, having a credit history that shows the following factors may negatively impact your chances of being accepted as a tenant:
- Bankruptcies and frequent debts
- County court orders and judgements
- An issue with managing your personal finance, such as poor credit card payment histories that have had to be resolved by the court
This is because poor credit ratings suggest that unless you make changes to your situation and finances, you may struggle to regularly make the payments you owe for your flat/apartment/home/place of residence.
Remember that in many cases, rental companies and agencies will care more about your credit history than private landlords. The fact is that their terms and lease may be stricter, so they might only accept people with top ratings.
This is because the agent is providing a professional service to a customer and needs to take the best possible steps to ensure that the landlord receives their income on time.
Do landlords really do a credit check?
Yes. Landlords really do check tenants to see their credit history. Property managers may also screen you and conduct a tenant credit check.
If a landlord or property manager wants to carry out a check, then you will need to sign a document in writing that gives your permission for them to see your credit file. This document may just be the rental application, or it may be a separate form.
One reason they do this is to make sure that they will be able to make their rent payments. If your landlord credit check shows that you have had issues in the past with missed payments, then there is a chance that the landlord may not accept you as a tenant.
It’s important to remember that a credit check for tenants does not work in the same way as checks when you apply for a loan. The key difference is that the approval of a tenant is entirely up to the landlord.
The landlord is not required to accept you if you have a passable score. There is also no legal minimum score, so your credit reports and background check from the tenant screening services might just be used as a guideline.
Who pays for the check?
Usually, the applicant pays for the screening check.
By defaults, this charge is usually included up front in the application fee.
Why do landlords credit check tenants?
A landlord credit checks tenants for several reasons.
The main motivation for landlords to check your credit is to make sure that you will meet your responsibility to pay the cash you owe them on time. Landlords want to avoid issues with tenants missing payments, falling into debts, and needing to be evicted.
If you stop paying your rent, it can take a landlord a long time to carry out an eviction process. Evictions require a written notice as well as a court order called a ‘possession order’, so it can cost the landlord or property agents a lot of time and money.
Landlords therefore use your credit report to try and avoid a situation like this with their renters. If your credit information shows that you have:
- Had county court judgements in the past
- Had an IVA
- Experienced bankruptcy or insolvency
Then they may feel concern that you will run into similar debt in the future and not be able to make rent.
However, remember that your background information is just used as a guideline. There is no minimum rating required to rent property in the UK.
So, the decisions are up to the individual landlord and poor scores may not always be deal breakers. As a result, there are many discrepancies and at times you will hear different stories from renters.
They may simply ask for a larger security deposit in advance, for proof of employment and job income from your employers, or get you to name a person you know as a guarantor (such as a friend, family member, or someone you are in a long-term relationship with).
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