Credit checks, Referrals and Guarantors

Introduction

Every serious landlord will do a thorough background check on every applicant that wants to rent their property. Just as a bank you’ll check you up before lending, landlords also want to protect their asset and ensure you’re financially able to meet your rent.

A complete background check lists quite a lot of information about the applicant tenant, which we’ll detail below. The results will be read arbitrarily by every landlord or letting agent and depending on their standards you may be approved or rejected to receive the property.

There may still be a way to rent the property you want, even with a bad background check, by providing a rent guarantor who will sign on all of your debts and fees should you stop paying.

Usually landlords pay for a tenant screening company, who will research the tenant in all possible sources of information and come back with a complete report to the landlord. The amount of information will depend, but in general you should be ready to see the elements below.

Proof of identity

Your landlord will request you to provide them a photo ID of yourself – driver’s license or a passport. If you can’t provide those for whatever reason, your landlord might be satisfied with a mobile phone or gas and electricity bill, a bank statement or a loan payment receipt in your name.

Don’t try to falsify information about your identity as you will be held responsible and likely to get rejected, or evicted if the tenancy has already began.

Right to rent check

The right to rent check is a relatively recent change in legislation, where your landlord is responsible for checking your immigration status and whether or not you have a right to rent a property in the UK.

From 1st of February, 2016, all private landlords in England, need to make right to rent checks.

To do this, your landlord must simply look at your ID. You get automatic right to rent in the UK if you come from:

• The United Kingdom and the colonies
• Switzerland
• The European Economic Area

If you have trouble providing your passport, any of these documents will serve the purpose for confirming your right to rent:

• EEA/Swiss national passport/identity card
• Registration Certificate or document certifying permanent residence of EEA/Swiss national
• EEA/Swiss family member Permanent Residence card
• Biometric Residence Permit with unlimited leave
• Passport or travel document endorsed with unlimited leave
• UK immigration status document endorsed with unlimited leave
• A certificate of naturalisation or registration as a British citizen

If you come from another country, your landlord will need to check your visa and the time you’re allowed to rent in the UK. For the full list of documents you can use to pass this check, please visit this link.

The landlord must only ascertain your rights to live and rent in the UK. You can’t be discriminated against based on your color, race, ethnicity or national background.

Credit check

You may be familiar with credit checks if you have dealt with bank loans, mortgages, or have a credit card. Credit checks originally came up as a way for financial institutions to preview your financial history before making a decision to lend to you.

There is no single database where everybody’s credit records are stored and maintained. Rather, there are many companies that collect relevant information. The biggest three in the UK are:

• CallCredit
• Equifax
• Experian

What information is on my credit report

Depending on which company you check with, there may be different information stored about you. For example, if you use Experian’s service, you will find the following information about yourself

• How many credit accounts do you have
• What is your outstanding total credit balance
• How much of your available credit are you using
• Are you keeping up with your payments
• What’s the average age of your credit accounts
• How many credit applications have you made in the last 6 months
• Are you on the Electoral Roll
• Have you got any CCJ’s, Bankruptcy or IVA records
• Do you still have unpaid debt at your previous addresses
• Have you been a victim of identity fraud
• How many addresses are you linked to
• How many names have you been known by
• Are you financially associated with anyone

Your credit report doesn’t contain personal information about you such as your bank accounts and their amounts, how much your salary is, what is your criminal or medical history, etc.

The landlord needs your permission to do a credit check

To get a credit report for you, the landlord or letting agent must first ask you for permission. They can’t access the information without a written authorisation signed by you. You’re likely to get a fillable form when the screening process begins.

You’re free not to provide your landlord with access to this information, but it’s likely you’ll get instantly rejected.

To see your own credit report, you can visit any of the companies above and request a copy for just £2. You can either use the online interactive version, or request a paper copy.

What your credit record means for your landlord

Your credit record is not an open book. Different people and institutions are allowed different levels of access of the information in your credit report. Only you and credit lenders (banks, credit card companies, etc) are entitled to see the entire financial history for the last 6 years.

Landlords and employers, who might have requested the credit check can only see publically available data, such as your name and address, voter registration, CCJs, and insolvency records.

They cannot see information about your credit commitments, such as credit cards, loans, mortgages, energy and mobile phone contracts.

Negotiating bad credit history

The credit report goes back for full six years, so if you have had any problems in the recent past they will show up. Even a single missed, delayed or incomplete payment on your loan or credit card will be recorded and visible.

Should your landlord be unhappy with your bad credit, you need to negotiate about how this impacts the tenancy between you two.

Your landlord cares about whether you can or can’t pay rent, right now. They don’t really have a reason to care why you were behind on your payments five years ago. That means recent history matters more.

If you still have a lot of bad credit and it seems like you are a risky tenant, try to prove that your current income is enough to make payments on your debts and still cover your rent. A copy of your last payment slip can help set that in stone.

Landlord reference

A very important element of the tenant screening is what your past landlords have to say about you.

A landlord reference is a brief letter (can be email) in which your past landlord explains how well or not you’ve behaved during your tenancy, if you have caused any problems, if there have been any delays or pauses to your rent payments and other relevant details that might convince or discourage them from accepting your tenant application.

You can have as many landlord references from your past landlords you want. It only counts in your favor if you can supply more than one positive reference. In addition multiple references may cancel out any bad facts about you from your most recent one.

Your past landlord is not obliged to provide you with a good reference or a reference at all. However, they must not list untrue facts about your tenancy or they can be held accountable for libel.

If you’re renting for the first time, obviously you don’t have one, and you should clearly communicate that with your landlord. It shouldn’t count against you.

What if you can’t get a reference from your landlord (or it’s a bad one)

If by any reason your request for a reference fails, or you ended your last tenancy with tension, you will have to get creative and compile a convincing case for why you have no reference to show.

If you keep all documents regarding your last tenancy (and you should, at least for some years back), you can show them to your landlord and prove your point. For example, showing them a tenancy agreement for 12 months and accompany it with 12 rent payment receipts it act as enough proof that you’re well able to pay rent in on schedule and in an organized fashion. This is really what most landlords care about, so it should serve your purposes.

You can do the same with the deposit, the utility bills and the end of tenancy notice (proving you weren’t evicted).

If you’ve got a bad reference, you may still want to show it to your landlord. Not all landlords are decent and ethical and nobody knows it better than themselves. You can accompany the referral with evidence disproving your ex-landlord’s statements.

Employer reference

The employer reference serves no other purpose than to prove you have a stable job and are in decent relations with your boss (otherwise they wouldn’t give you the reference).

This will probably be preceded by a thorough interview about what do you do and how much your income is.

Often the landlord may be satisfied if you give them a phone number of your boss or higher management, who they may call to confirm the information you gave them about your job is correct.

Criminal background check

The Disclosure and Barring Service (previously Criminal Records Bureau) holds records from the UK’s citizens criminal history. Your landlord may want to make a DBS check on you, if you tell them you’ve been in prison, or they for any reason suspect it.

How to do a DBS check

Your landlord is unlikely to be allowed to deal with the DBS directly, unless they are a big corporation and do more than 100 checks every year. If your landlord is small time, they need to use an umbrella body that deal with the DBS instead.

Once they have sorted their registration, they can request an application form. The tenant needs to fill in the form and provide their ID, if they haven’t already. When everything is complete, the landlord will submit the application and wait. Generally, it can take around 8 weeks to get a DBS check.

When the check is complete, the tenant will receive a certificate for their criminal history. The landlord needs to request this from you and you’re free to either show or hide it.

However, keep in mind that concealing this information is likely to get you rejected.

What to do if I have a criminal past

Nobody’s perfect. If you have past criminal convictions, or have been to prison, it doesn’t mean that you don’t have a right to rent a property.

It’s true that a lot of landlords will automatically reject people with recent criminal convictions or with any serious offence throughout the years.

The way you play your cards will determine if you can negotiate about your DBS check. If your landlord or letting agent never requests one, you can safely keep quiet about it, if not asked.

If you get asked about it during the interview, or you know your landlord is about to do a screening service on you, it’s best to go for full disclosure. If you preemptively talk about your criminal past and give reasonable explanations for why this will not affect you as a tenant, there is a bigger chance that your landlord will not consider it against you.

Using a rent guarantor

A rent guarantor is a person or a company that will vouch for your rent payments, bills, taxes and damage done to the property during the tenancy period. The guarantor is legally bound to cover all these debts and any other the tenant has accumulated in relation to their landlord.

When your landlord is not convinced you can meet your monthly rent, or if there are any associated risks with you moving away with a debt, or causing damage to the property, they may request that you provide a guarantor to be able to rent the property.

Obviously, the people that are likely to become your guarantors are family, closest friends and maybe your employer. Pick the person well and be 100% transparent with them regarding WHY you need a guarantor and what risks are there for you to fail your rent payments or incur other financial debt to your landlord.

Your guarantor needs to be more financial stable than you are. The landlord will request them to agree on credit checks and any other checks that have been made to you. In turn, the guarantor must satisfy the landlord’s standards to be eligible.

Guarantor agreement

The rent guarantor will need to sign a standard guarantor agreement with your landlord. Under this agreement they will accept to cover any cost incurred by the tenant, including late rent payments, energy bills, council tax, repair costs for damage caused by the tenant and even legal costs that the landlord has sustained due to the tenant.

Upon signing, the agreement becomes a binding contract for the full length of the tenancy, until the tenant has moved out.

Before signing the guarantor agreement, the guarantor should be supplied with the tenancy agreement, so they can fully read and get to know the tenant’s (and therefore their) responsibilities.

If you’re about to become a guarantor, you need to make sure you’ve read the tenancy agreement and all other relevant documents and information. Being a guarantor is a serious responsibility and you may become liable for thousands of pounds on the tenant’s behalf, so makes sure you’re in the loop.

One very important element when becoming a guarantor is that if there is joint tenancy on the property, you become a guarantor on the whole tenancy and therefore the full costs, not just half of them.

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