Almost half of landlords would reject a tenant based on their credit score

Paying rent on time should be counted towards a tenant’s credit score to make them more appealing as applicants for rental property, says a referencing and insurance firm.

The call comes after research found that 46% of landlords would refuse an application from a new tenant with a poor credit history. However, credit histories do not currently form part of regular checks for new tenants.

The Landlord Secure figures showed that 48% of landlords would refuse a tenant who had been subject to a county court judgement in the past, while 42% would reject an application from a tenant with past insolvency issues.

Applicants with existing debts like credit cards or loans would also raise red flags for 30% of landlords, while those in receipt of housing benefits would struggle to be accepted by 19% of UK landlords and those on Universal Credit would fail against 16% of landlords.

Steve Burrows, managing director of Landlord Secure, said tenants are left at a disadvantage as they can’t boost their score by being a reliable rent payer in the same way a credit report would show how well a home owner repays a mortgage.

He said: “Those in rental properties are at a serious disadvantage when it comes to building a credit rating because paying rent on time doesn’t count towards this score.

“Given that landlords would put more weight behind a tenant’s credit score, those in rental properties should be given the chance to build a better credit score based on their history of paying rent on time.”

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4 Comments

  1. Daniel Latto

    “Paying rent on time should be counted towards a tenant’s credit score to make them more appealing as applicants for rental property, says a referencing and insurance firm”

    Totally agree – I won’t be the only one who has heard, when chasing a missed rental payment “Well I had to go on holiday” – a s though paying their rent is almost 3rd or 4th down their list  .

    It never matters missing rental payments until they get hit with a Section 8 for non payment – and even that doesnt come up on their credit rating until theyve  been hit with a CCJ.

    Thats not on. Especially as rental payments will likely be their biggest outgoing each month.

    It’s about time we got serious about treating the PRS like a proepr business, as thats what it is.

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  2. Will

    It is a fact that if  a potential tenants credit rating is such that it demonstrates they cannot manage their finances properly and that they would not be considered acceptable for rent guarantee insurance why would you accept them?  Moreover, with ever tightening anti landlord legislation, threats of more security of tenure and rent control only adds pressure on landlords to be even more cautious.  It is a fact that the sector worst affected will be those who in the most vulnerable positions and were traditionally helped with council accommodation, or pushed onto the street if councils do not consider them to be priority.  It is for referencing companies and insurers to change how they work if “on time rental payments” are to be taken into account. If a potential tenant has demonstrated poor financial judgement in the past, whether it relates to rent or credit card debt, it indicates the risk that future problems is significantly increased.

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  3. AgencyInsider

    The modern day obsession with ‘credit rating’ makes me smile ironically. The huge parasitical industry that has grown up around it is an inevitable product of the electronic age and the greed of the financial world to foist credit on the foolish and unwise. I think that through it we have lost more than we have gained.

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  4. GeorgeHammond78

    What a load of tosh – if someone is found to have a CCJ, of course they should be rejected as an applicant. Wholly immaterial that they may have paid rent on time, a CCJ is an indicator that the debtor has walked away from their debt. A creditor will only seek a CCJ as a last resort – they will have exhausted themselves through numerous other avenues before arriving in court.

    IMO, CCJ=Fraud.

    If I used a referencing company that took into account rent paid on time to over ride bad credit, they’d be getting the sack, UNLESS, they provided FOC rent guarantee insurance  and claims paid within days of being made. And NO policy excesses……..

     

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