Rent and Credit > How do estate agents run credit checks?

How do estate agents run credit checks?

Wollit Team2 minute read · Updated 18th September 2024

When you're looking for a new home to rent or buy, you might find that some estate agents check your credit. Here is how these credit checks are run, why they are important, and how to make sure you pass them.

What is a credit check?

A credit check is a process that allows lenders, landlords, and estate agents to look at your financial history. This helps them decide if you are likely to pay money owed on time.

In the UK, there are two main kinds of credit checks:

Soft checks, which do not affect your credit score and are often used for background checks. Landlords and letting agents usually use soft checks.
Hard checks, which are much more detailed and are done when you actually apply for loans or credit cards. Hard checks can impact your credit score.

Credit checks are important because they help landlords and estate agents see if a potential tenant or buyer is likely to make payments on time. By checking how you’ve made payments before, estate agents can avoid renting to someone who may not pay rent regularly.

How are checks for renting usually done?

Before running a credit check, estate agents must ask for your permission. This is very important to keep in mind. You usually give this permission by signing a form during the application process. Without your consent, they cannot access your credit information.

Afterwards, the process is fairly straightforward:

The estate agent will collect some basic information from you, like your name, address, date of birth, and sometimes your National Insurance number.
The estate agent will perform a soft check on your credit report. After the check is complete, the estate agent will look at the results to see if you are financially reliable. They will look for any warning signs that might suggest you could be a higher risk as a tenant or buyer.

What information do estate agents see during a credit check?

Because estate agents only run a soft check, they won’t see your full financial history. They won’t see detailed information about your existing debts or payment history on loans and credit cards.

This is what they actually see:

If you’ve registered to vote: this helps to confirm your identity.
County Court Judgments (CCJs): basically court orders against you due to unpaid debts.
If you have declared bankruptcy in the past, this will also show up in the report.

Basically, estate agents only care here about the big red flags like past bankruptcies or court judgements.

How should I prepare for a credit check done by estate agents?

To improve your chances of passing a credit check when renting or buying property, here is what you should do:

Before applying for rental properties or mortgages, look at your own credit report for any mistakes or issues that need fixing.
Make sure that you are registered at your current address; this can help improve your credit score.
Try to lower any outstanding debts before applying for housing; this helps keep your overall debt manageable.
Avoid applying for multiple forms of credit in a short period before seeking housing as this can lead to hard inquiries that may lower your score temporarily.
And keep paying bills on time to improve your payment history and boost your score over time.

This final bit is perhaps the most important, since your history of payments is the most important factor in your credit history. Also, it’s not just estate agents that care about this – mortgage lenders and other financial institutions care about it also.

Luckily, now there are many apps that can help you build and improve credit.

One such app is Wollit. Wollit is an app available both on Android and iOS, and it works by reporting a fixed-fee monthly subscription as a loan repayment to all three credit reference agencies. This helps you build your credit history and directly influences your credit score.

On top of this, Wollit can also report your monthly rent payment to Experian. This can add another line in your credit report that shows lenders that you’re reliable and pay your bills on time, helping you make the most of your rent while you prepare to become a homeowner.