A tenant’s credit history is a serious consideration for landlords, with 46 per cent saying that they would refuse an application from a new tenant with poor credit history.
New research commissioned by tenant referencing and insurance agency Landlord Secure found that credit history was a significant issue for UK landlords, with 48 per cent of those surveyed claiming that they would refuse to sign a lease agreement with a tenant who had been subject to a county court judgement in the past. 42 per cent would reject an application from a tenant with past insolvency issue.
30 per cent of landlords would be concerned about letting to applicants with existing debts such as credit cards or loans, whilst 19 per cent were skeptical of letting to those on housing benefit. Those who received Universal Credit posed a concern for 13 per cent of landlords.
However, despite the weight placed by landlords behind credit ratings, credit history checks are not commonplace for new tenants, despite them offering a better image of how an applicant has dealt with payments in the past. Instead, letting agencies reply on publicly available information such as county court judgements or declarations of bankruptcy. These can offer some insight into a potential tenant’s financial history, but will not indicate their current situation.
The majority of tenants who fail to pay do not do so in order to deliberately withhold rent, and in many cases have simply found themselves in financial trouble. However, with that in mind it is important that landlords are given adequate tools to survey a tenant’s history, to ensure that they are letting to those with the will to pay.
Managing director at Landlord Secure and LateRent, Steve Burrows, said: ‘Those in rental properties are at a serious disadvantage when it comes to building a credit rating because paying rent on time doesn’t count towards this score. Given that landlords would put more weight behind a tenant’s credit score, those in rental properties should be given the chance to build a better credit score based on their history of paying rent on time.’