What Happens If Your Tenant Fails a Credit Check?

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If a tenant fails a credit check, you do not have to worry. Even if a potential tenant will make a good tenant, they can still fail a credit check for a number of reasons, and in some cases you may still be able to rent your property to them. This might sound strange, but understanding why tenant checks are done will make it clearer.

What a Tenancy Check Looks For

A tenancy check is used to check:

  • If a potential tenant is who they claim to be
  • If the applicant is employed and earning the amount which they claim to earn
  • If the applicant has a bad history of debt or bankruptcy
  • If the applicant can afford to pay rent for the property

From these checks, a tenant is given a credit score with a “pass” or “fail” grade which will include a “risk rating” showing if the applicant is at a high, medium or low risk. This is then used to advise a landlord on whether to accept an applicant or not. It is completely up to you what you do in regards to this information, but if you find that you really like a tenant who failed a credit check, you will want to contact the company that ran the check and find out the reason for the applicant’s failure.

Reasons Why a Prospective Tenant Might Fail a Credit Check

A prospective tenant could fail a credit check if the company carrying out the process cannot verify the individual’s current address. This can occur for reasons which are not the applicant’s fault. These include:

  • The applicant is not involved in making bill payments at their previous or current apartment.
  • The applicant hasn’t lived long enough in their current location for their name to be included in the electoral register.
  • The applicant’s name is not the name on the lease agreement document of the current address.

If any of these turn out to be the reason for the credit check fail, you can ask the applicant to provide a reference letter which will be given to them by their current landlord, verifying they are actually living at the said address. You can also contact the landlord yourself, as well as check the land registry to verify the property actually belongs to the landlord whose name is on the reference letter.

Some reference agencies fail an applicant if they calculate the salary they earn as too low. Some agencies calculate that a tenant’s salary should be three times the monthly rent if they are to comfortably pay the rent. They will, therefore, fail anyone who has a salary less than three times the monthly rent.

In a case where an individual fails a credit check because of their salary level, you can request for a “guarantor” credit check. If the guarantor passes the credit check, they will have to sign the lease agreement, alongside the applicant, stating that they will pay the rent should the applicant fail to make rent at any particular time.

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