Moving house should be exciting news for most, however, in the current climate, there are more than a number of financial hurdles faced by tenants – especially if they are on furlough leave or have been made redundant as a consequence of the coronavirus pandemic. But, there are a few easy steps you can take to ensure your credit rating sees an improvement and you will never be turned down by rental credit checks again.
What are credit checks and referencing?
When renting a home, you will need to go through various processes that determine if you are financially suitable to rent.
The information gathered provides the landlord with information about your credit history and current financial circumstances.
CEO of video rental app MoveBubble, Aidan Rushby told Express.co.uk: “Finding and securing a new home can be a daunting process, especially during the current climate where concerns can range from renters not feeling comfortable to physically viewing a potential new home – to having to go through credit checks and get their head around providing employment and financial circumstances.”
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You will need to provide the following:
- Address history
- Proof of employment
- Reference letters from previous landlords and employers
- Three months’ work of bank statements
- Tax return if you are self-employed
- Letter from accountants if self-employed
- Guarantor – if required
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How to prepare for credit checks
Get everything together: This means getting all the necessary information together and ready to go.
Get together your proof of identity, employment, character, and most importantly, proof you can pay the rent by providing three months’ worth of bank statements.
If you are self-employed, you will need to provide a tax return, proof of income and a reference letter from your accountant.
Aidan Rushby told Express.co.uk: “Reference letters are vital, as they provide the all-important character assessments.
“Whether you need one from your accountant, previous landlord or employer – make sure you’re ahead of the curve by contacting them early and letting them know they might need to provide a reference.”
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Do the maths: It is wise for renters to remember you need to be earning 2.5 times the annual amount of rent.
As an example, renting a property that costs £15,000 a year, the renters moving in should earn £37,500 combined.
Mr Rusby said: “This is the part people often skip past. They end up viewing the house and falling in love with their dream property only to be disappointed with the results of the credit checks.
“Another thing to remember when renting with a group of friends or partner is to agree your joint budget upfront. Being prepared saves any disappointment upon the credit check results.”
Be honest and upfront: The key to passing credit checks is to be upfront about your assets. Unlike checks for loans, credit and mortgages, the decision to rent a home is not calculated by a computer.
Landlords do not need to be aware of your entire life history, but details related to your eligibility could prove vital.
If you have information about yourself that could reduce your chances of renting, be sure to let the landlord or estate agent know well in advance.
Being honest and transparent should put you in a more favourable position, as it will show you are a trustworthy prospective tenant.
Mr Rushby added: “The checks are rigorous, and will uncover any potential secrets – honesty is the best policy.”
Using a guarantor: Even if you fail the referencing and credit checks, there is still another option.
A guarantor is a good idea to provide security in your place in the case where you may not have all the credentials to pass the checks.
Guarantors need to go through the referencing process just like the renter, but will not have to provide previous landlord references.
However, the catch is that guarantors usually need to earn three times the annual rent, and they will be responsible for doing so in the case that you cannot.
Mr Rushby said: “MoveBubble will walk you step-by-step through the whole renting process, and if you are worried or have questions we are always here to support you, making the whole procedure effortlessly smooth.
“In addition, by the end of June, we are hoping to have a new system in place to assist with trouble-free credit checking.”
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