By: Asad Butt
Last Updated: January 31, 2019

How Credit Checks For Landlords Can Help Determine If A Tenant Is Dependable.

Credit Check | Landlords

Tenant credit checks are crucial for safe and sensible lettings. After all, property for rent is an investment. Credit checks help you to let your property to a tenant with a sound credit history and financial stability. Credit checks also help you to confirm, It does exactly what it says on the tin.

Table Of Contents

What is a background check?
Who Carries out the background check?
Why Credit Check is so important?
Should I always credit check a tenant?
How long does a credit check take?
Check If the tenant has the right to rent
What are exemptions for checks?
Ask for proof of identity
Check for Financial history
How to run a credit check?
What Information do I need to run a credit check?
Do I need permission to carry out a credit check?
Who can run a credit check?
How much does it cost to do a credit check?
How much fee can I charge for a tenant credit check?
What are some of the good credit check companies?
How to analyze the results of a credit report?
What if the credit report is positive?
What if the credit report is negative?
Can a landlord refuse an applicant with a bad credit history?
Tips for landlords regarding credit and background checks

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It is not a legal requirement to run a credit check on a tenant, it certainly is a good idea.

If an applicant shows a sound credit history like no missing bills or payments, It is highly likely that you will not be wasting your precious time, chasing the rent.

Most importantly, If their report reflects, they have a habit of looking after themselves, you will have some assurance that they will look after your property as well.

What is a background check?

A background check is a method of acquiring information about a person or company to confirm their identity and history of the past behavior. It can include but is not limited to:

  • A person’s criminal record
  • Address history
  • Educational records
  • Employment history
  • Open and closed Accounts Information
  • Payment history
  • Recent credit applications
  • Recent loan applications
  • Public Records (electoral registration)
  • Any loans
  • Any mortgage etc

Who Carries out the background check?

Typical usage for a credit check is:

  • Checking a new job applicant
  • A Landlord / Tenant looking for a new apartment,
  • Someone taking a loan
  • Someone taking a mortgage
  • Someone applying for a credit card
  • Someone buying a phone contract or a car

Why Credit Check is so important?

First, your rental property is an investment. Like any other investment, we would like to make sure it returns desired income and it is safe. Background and credit check for renters can provide you with information to make a sound decision.

Second, there are a few obligations on you as a landlord you need to fulfill to avoid any issues.

Should I always credit check a tenant?

It depends. As a general rule, you should do it as you there is no other way of knowing about the reliability of a tenant and if they would be able to keep up with the rent payments.

The only two alternatives are third party references like from previous landlords or letting agents or using a guarantor.

Opting for no credit check can help you attract applicants who are looking for private landlords requiring no credit checks or apartments and houses that don't require a check, for one reason or another like willingness to pay the whole rent upfront.

How long does a credit check take?

The very basic check normally takes a few hours to a day to return results.

The detailed check can return a report within in a day to a few days time.

You should check with the credit check service for their timeframes as they vary across the board.

Check If the tenant has the right to rent

You are required to check by law that the applicant has the right to rent in the country. For the purpose, you will need to request the documents proving their immigration status.

If they are nationals, the passports will be enough.

If they are foreign nationals then additional checks apply like visa or permission to stay or documents proving their immigration status is under consideration by the Home office.

This is called the ‘right to rent check’.

It involves:

Checking original documents for the person contracting, proving the right to rent a property

check original documents other individuals who will be living in the property

make copies of the documents for your record

See List of acceptable documents

What are exemptions for checks?

There is a certain exemption if the property is

  • A Registered student accommodation
  • An accommodation arranged as part of an employment package
  • Social housing
  • A council accommodation
  • A Hostels
  • A Refuges
  • A Care home
  • A Hospital
  • A Hospice
  • Accommodation with a lease of 7 or more years

Ask for proof of identity

As a landlord, you need to see a photo ID, such as a driving license or passport. If a photo ID is not available, a signed bank card or a utility bill from the current address of the tenant can be used. This information will come up as part of the report you will get from the credit checking agency for you to match a confirm.

Check for Financial history

As a landlord, you can request tenant credit and background check as a proof that the applicant will be able to afford the rent. A few documents s which can help are:

  • An employment contract
  • Payslips
  • Bank statements
  • A letter from your employer confirming your job
  • Self-assessment filing with HMRC (self-employed)
  • Documents detailing any benefits you claim

How to run a credit check?

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The information provided by credit checks varies from agency to agency. Most credit check reports include:

Personal Information:

  • Name of a person
  • Date of birth
  • Current address
  • Previous addresses
  • Employment history
  • Relationship information
  • Electoral Roll

Credit score:

A numerical score indicating the creditworthiness of the tenant

Financial accounts information

This section provides the information given by credit providers and lenders on accounts which are open or now closed.

  • Lists of bank accounts (with opening date)
  • List of closed bank accounts
  • Credit card accounts
  • Loans
  • Mortgages
  • Payments history
  • Loan amount
  • Credit card limit

Public information:

  • Evictions
  • Bankruptcies
  • Insolvencies
  • Defaults
  • CCJs
  • Decrees
  • Other court information


Details of any warnings registered at your address(es) by Cifas, the UK’s Fraud Prevention Service.

Previous credit checks:

Any credit or background checks requested by other parties.

Other Information:

Many companies provide a comprehensive check with added fees which could include:

  • Credit agreements,
  • BT telephone
  • HM Treasury Sanctions
  • OFAC and deceased check
  • Linked Addresses

What Information do I need to run a credit check?

In order to run a credit check on a tenant, the application form should, at a minimum include:

  • Person's full legal name.
  • Address history for the Last three Years.
  • Date of Birth

Do I need permission to carry out a credit check?

It is an obligation to acquire permission in writing in order to carry out a credit check, on behalf of a prospective tenant.

The person will need to sign a release, authorizing landlord/agent with a date on the document. You should keep it for your records.

Credit check consent doesn't need to be a separate document. You may include a statement in your regular tenancy paperwork or may get a separate document signed.

Most companies offering credit checks will provide an online or downloadable form for free.

You can also request your letting agent to do it on your behalf which could attract an added fee for their time.

Who can run a credit check?

The credit checks are carried out with three major referencing agencies which are the source of this information.

  • Experian
  • Callcredit
  • Equifax

Many third-party services also provide tenant credit check in partnership with these three companies.

Whatever service you use, to be able to apply to use a credit check service, a landlord would normally need to provide his or her basic information to the agency which normally includes:

Proof documents

  • Proof of address
  • Proof of identification
  • Proof of property ownership

General Information

  • Landlord name
  • Date Of Birth
  • Company details if applicable

Contact Information

  • Home Phone Number
  • Work Landline Number
  • Mobile Phone Number
  • Email

Address history

Including postcode and the time you have been at this address.

How much does it cost to do a credit check?

The cost varies from agency to agency and the type of check you require. landlordreferencing can provide you with a financial report for the tenant for:

A Basic Credit Check: £7.00 (inc.VAT)

A Detailed Credit Check: £12.00 (inc.VAT)

A Basic Credit Check report includes information like personal information, credit history, Inquiries, and public records.

Experian tenant credit check following two types of tenant checks that a landlord can use

Instant report: £15 excl. VAT (£18 incl. VAT)

Comprehensive report: £25 excl. VAT (£30 incl. VAT)

How much fee can I charge for a tenant credit check?

It depends on:

  • The fee you will be paying to the credit reference agency.
  • Plus if you would like to charge for your time as well.

As credit check fees are same across the country, you should consider charging for your time on top of other fees. A low rent property with added fees and charges can deter applicants.

On the other hand, you can offer to adjust the fee with the first rent if the credit check report is positive and provided the tenant agrees to take the property.

You may consider carrying out credit checks if the tenant confirms their interest by submitting a deposit.

Another thing to note is, applicants with poor credit score will not likely to consent to pay a fee.

What are some of the good credit check companies?

There is no such thing as the best credit check for landlords. Different companies provide different information but most of them include the basic information in their report when you carry out a credit check on someone.

How to analyze the results of a credit report?

When you have the report for an applicant, pay close attention and look for the following:

  • Are there any late payments
  • Ar there any accounts with an unpaid balance
  • Any marks for bankruptcies
  • Any mark for evictions
  • Any court judgments
  • Are there any amounts of debt

Try to do do the maths your self by calculating the incoming and outgoings. You can find the earning levels from the employment contract, bank statements or payslips provided by the applicant.

Now check how much they are paying in terms of bills and repayments. Also, you need to take into account the average day to day maintenance expenses like food and travel etc.

Check if the outgoings leave enough balance for the rent payments.

What if the credit report is positive?

A positive report can provide you with peace of mind but it's not a guarantee.

As I said, you need to make sure the earning and outgoings reflect the ability for an applicant to pay rent on time. So make sure you give it a through homework.

Even with a good credit report, you still have to take necessary precautions like a security deposit.

Read: The Basics Of Property Rental Security Deposits

What if the credit report is negative?

A negative credit report might sound alarms but it's always good to have a word with the applicant if especially, the demand for your property is low.

Always consider a credit report as part of an equation but not a decisive factor.

There might be cases of:

  • Mistakes in the report
  • Unfortunate circumstances like a breakup
  • Scam or fraud committed against applicant without them being aware

There are a few options you can consider in case of a bad credit report:

  • A sitting with the applicant might help create a clearer picture to help you with your decision.
  • Another thing you can do is to ask for a larger deposit to keep you safe in case of an unfortunate event.
  • You can agree to a six-month tenancy contract and request the full rent upfront.
  • You may ask them to arrange a guarantor, who is happy to take responsibility for rent if the applicant defaults.

"Advance rent in your bank is better than a piece of paper saying that someone has good credit history..."

Can a landlord refuse an applicant with a bad credit history?

A landlord is under no obligation to accept any tenant with a bad credit history.

It makes sense because it is an investment and their livelihood might be at stake.

It is advised to clearly state your reason for refusal to the applicant, backed up by evidence(report), to avoid any complications in the future.

Tips for landlords regarding credit and background checks

  • If you are going to add credit check to the renting process, make sure you run them on all applicants.

  • Make sure you don't forget to take the written consent from the applicant to carry out the credit check.

  • Make sure the consent is in written form.

  • Always follow a standard process and set criteria to avoid any issues regarding discrimination based on gender, color or race etc.

  • Remember to inform a refused applicant in writing and make sure you keep the proof in the file to avoid any accusation of discrimination

  • If you are requesting a larger deposit, upfront rent or a guarantor, make sure you state the reason in writing when making that request.

  • It is always best to have everything signed and in writing to protect yourself.

  • Review ratings for the credit reference agency itself first for the up to date and accurate reports.

  • A credit report should be part of the equation not the sole deciding factor for acceptance or refusal of an application.

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Published Under: Credit Check
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