Rent and Credit > How credit checks for renting work

How credit checks for renting work

Wollit Team3 minute read · Updated 15th September 2024

Renting a home in the UK involves several steps, and one important step is the credit check. Here is how credit checks work, what landlords look for, and how you can improve your chances of passing one.

What is a credit check?

A credit check is usually a way for lenders to see if you’re a reliable borrower, by looking at your credit history and credit score.

When it comes to renting, a credit check is a way for landlords to see how reliable you are when it comes to paying rent. It involves looking at your credit history to understand their ability to pay bills on time.

In the UK, landlords usually do a soft credit check. This type of check does not harm your credit score and only shows basic information that is publicly available – things like whether you’ve ever declared bankruptcy or were taken to court.

Also, it’s far more common to be asked for a credit check when renting from a lettings agency – most private landlords do not bother with one.

Why do letting agencies run credit checks?

Letting agencies usually run credit checks for a few reasons:

A credit check shows how well you’ve managed their money in the past, including whether you have paid their debts on time.
By looking at your credit history, agencies can also assess the risk of you not paying rent. A poor credit history may suggest a higher chance of late payments.
Sometimes, landlords and agencies must run credit checks to follow housing laws.

What can landlords and letting agencies see during a credit check?

A credit check for renting shouldn’t worry you. When a landlord or agency carries out a credit check, they usually only see basic things:

Whether you’ve registered to vote (but not if you’re actually voted). This simply confirms your name and address to verify your identity.
County Court Judgments (CCJs): any legal judgments against you for unpaid debts will be visible.
Insolvency Records: information about bankruptcies or financial troubles may also appear.

However, landlords cannot see detailed credit information like credit limits or specific repayment history. They only have access to public information that helps them make informed decisions.

Do I have to go through a credit check when renting?

First of all, it’s important to remember that a landlord (or anyone, actually) cannot run a credit check on you without your approval.

This means that you do not have to agree to a credit check. However, if you refuse, landlords may become concerned about your reliability.

Without a credit check, landlords may feel less confident in renting to you, as they lack important information about your financial background.

So, while you can say no to a credit check, doing so might make it harder to find a rental property.

How does credit history affect renting?

Credit history is very important in the UK, and it plays a big role in the renting process as well.

Having a poor credit history might mean you will not get approved as a tenant, meaning the landlord or agency will decide to rent to someone else.

Also, if you have a low credit score, you may need to pay a larger security deposit or provide a guarantor to reduce the risk for the landlord.

How can I prepare for a rental credit check?

Here are some steps you can take:

Before applying to rent, you should check your credit report and score. You can do it for free on Experian, ClearScore (for your Equifax file), and Credit Karma (for the TransUnion one). This helps you understand your financial situation and fix any issues.
Register on the electoral roll: Being on the electoral roll at your current address is very important. Landlords use this information to confirm your identity. If you are not registered, contact your local electoral registration office to update your details.
Prepare documents like recent bank statements, payslips, or proof of employment to show that you can pay rent. If you’re self-employed, consider talking to your accountant for a reference.

What happens if I fail a credit check when renting?

Failing a credit check can be disappointing, but it doesn’t mean you can’t rent a home. Here are some steps to take if you are rejected:

Ask your landlords or agency why you failed the credit check. Knowing the reasons can help them address any problems.
Get a copy of your credit report to find any mistakes or negative marks that might have influenced the landlord's decision.
If your credit history is poor, you might be able to rent by providing a guarantor – someone with a better credit history who agrees to pay the rent if you cannot.
Sometimes, you can also negotiate with landlords, such as offering to pay several months' rent in advance or providing additional references from previous landlords or employers.

The most important thing, however, is to make sure that you’re not in this situation by building a better credit history.

One of the ways to do this is by downloading a credit-building app like Wollit.

Wollit works by reporting a fixed fee monthly subscription as a loan repayment to the credit reference agencies (Experian, Equifax, and TransUnion). This helps you build or rebuild your credit history by showing that you can pay debt on time. It can even report your monthly rent payment to Experian, adding another line in your credit report that shows lenders you're responsible and pay your bills when they’re due. In time, this will help you improve your credit score so you won’t need to be worried about any credit check ever again.