Can Landlords do Credit Checks?


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Most landlords will want to perform at least a basic credit check on applicant tenants before they commit to letting out their property – to ensure that their new tenant will be able to keep up with their rent payments and avoid the hassle of debt collection or chasing late payments. While it is not a legal requirement to run a check on a tenant’s credit history before they move into a property, it is certainly a good idea and could help to avoid any nasty surprises further down the line.

How Do You Credit Check a Tenant?

There are a number of options available for finding out if a tenant has a poor credit history. Landlords and letting agents will usually perform at least a basic credit check on all applicant tenants, but many will do this as part of a broader, more comprehensive tenant referencing process.

If you simply want to perform a credit check on your tenant, you can do so via a credit referencing agency. The three largest credit referencing agencies in the UK are:

Most of the large credit check companies will offer a tenant screening service for private landlords but the results will be much more limited than a full tenant referencing report.

For example, the Experian instant tenant check will include an identity check and adverse financial check which will verify names/addresses and check for any CCJs, fraud or other adverse financial data. They then use these 2 checks to form a Tenant Risk Score that provides an impartial decision on whether it is advisable to let your property to the applicant tenant.

If you want to get a more comprehensive background check on a potential tenant then you should choose one of the best tenant referencing services that specialise in these types of checks for landlords. A full tenant reference will always contain a credit check, and they do not cost much more than a simple credit score report, so you might as well go for a proper tenant referencing service as opposed to a pure credit referencing product.

What information is in a tenant reference report?

As mentioned above, a full tenant referencing report is much more comprehensive than a simple credit check and will give a much more detailed analysis of your potential tenant’s suitability for your property.

As well as identity verification and a credit check, a full tenant reference report will usually contain:

  • Employer reference: The tenant referencing company will contact the tenant’s employer to confirm their salary and employment status. They may also ask for a written reference from the employer.
  • Previous landlord reference: The tenant will be asked to provide a written reference from past landlords to prove that they will be reliable and responsible occupants of your property.
  • Affordability checks: By combining employment data with a tenant’s credit report and financial history, the referencing company will make an assessment to see if the tenant can reasonably afford the rent and any additional costs associated with letting your property.

By combining all the above information, along with a variety of other background checks and verification processes, the landlord can receive an accurate and detailed tenant reference report that helps them to understand if the tenant is suitable for their property.

Do I need tenant’s permission to run a credit check?

Yes, you will always need to get permission from your tenant before conducting a credit check or reference.

Whether you use a credit referencing agency or a tenant referencing service, you will need to obtain permission from your tenant before you can carry out the background and credit checks. This will usually be required in writing and the company or agency you are using to conduct the check will contact the tenants on your behalf to get their permission before starting the reference.

What information is on a credit report?

A full credit report will contain a variety of information including any outstanding loan agreements, a credit score, missed or late payments and an overview of your financial history. However, you can only see the full selection of information for your own credit report. Only the person being checked and credit lenders, such as banks, can view the full report with a detailed financial history over the past 6 years. Your credit report does not contain personal information about you such as your bank accounts and their balances, how much your salary is, what your criminal or medical history is like etc.

Here you can find a full list of what information is on your credit report

What can landlords see on a tenant credit report?

When a landlord is running a credit check on a tenant, they will only be able to see publicly available data on the resulting credit report. The landlord will not see information about the tenant’s existing credit commitments, like credit cards, loans, mobile phone contracts etc.

A landlord will be able to see the following publicly available data on a tenant’s credit report:

  • Court judgements
  • Insolvency records
  • Tenant’s full name
  • Tenant’s current address
  • Voter registration details

Summary

So to sum up, yes landlords can perform credit checks on potential tenants but only if they have written permission from the tenant. Landlords can use one of the main credit referencing agencies to perform a tenant credit check, but the resulting report will only show publicly available data and will not give a detailed overview of the tenant’s financial history.

In light of this, landlords should consider using a full tenant referencing service, instead of requesting just a simple credit check. Tenant referencing agencies specialise in tenant screening for landlords and can deliver much more detailed reports that will provide a more in-depth overview of your tenant’s suitability for your property.

Full tenant reference checks are not much more expensive than single credit checks, so landlords would be advised to choose a comprehensive tenant referencing service to ensure they find the best tenants and avoid any nasty surprises further down the line.

Landlord’s can also do credit checks using tenant referencing, find out more below

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