How To Pass Referencing Checks

When you are signing a contract to rent a home you will be asked by the landlord or estate agent to supply a reference contact from your previous landlord.

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This is nothing to be intimidated by as is simply a way for the landlord to determine that you’re suitable for the property. A reference check provides the landlord with information about your professional circumstances and previous living experience so that an informed decision can be made on whether to allow you to rent the property. It’s only natural that a landlord will want to know whether you will take care of their property while you are living in it.

This guide will help you to understand the referencing process and provide a few tips on how best to prepare yourself for credit checks.

What is tenant referencing?

Tenant referencing confirms the past behaviour of the tenant from previous rentals and whether they made payments on time. This gives the landlord confidence that they are choosing the right tenant for the rental. Landlords may also request credit checks, bank statements and employment details from the prospective tenants. By performing these checks they can get a rough idea about your financial situation, which helps to determine if you can pay the rent.

There may also be a request for a reference from the tenants’ employer and previous landlord too. It is important that tenant referencing takes place to ensure that the tenant is legally allowed to rent in a residential property in England, this is called the ‘right to rent’ (more on that later).

What are credit checks?

A credit check, also known as a credit search, looks at information from a credit report to see the financial behaviour and patterns of a person. They can take place if there is a legitimate reason for it to be conducted e.g. the person applied for a loan or is applying for a tenancy agreement. By running a credit check, the landlord/agent will see the following information:

  • Electoral roll details which confirm current and previous address details
  • Credit cards and loans accounts that you have open
  • Any joint accounts that you hold with other people
  • Debt and bankruptcy history
  • Any previous history of missed repayments

There are two types of credit check, a soft credit check or a hard credit check. A soft credit check is a way of deciding whether your application would be successful without having to do a full examination of your credit history, so it only looks at specific information. This is the type of check made for the following reasons:

  • A personal credit report search conducted by yourself
  • An identity check made by a company
  • Using online websites to compare credit and check on your eligibility

A hard credit check is a complete search of your credit report made by a company. Each hard check is recorded, and too many of these can affect your credit score for six months if too many are conducted over a short period of time. These checks are done for the following reasons:

  • Applying for a loan, mortgage or credit card
  • Applying to a utility company
  • Pay monthly phone contract application

Why do I need to undertake referencing and credit checks?

As mentioned previously, these need to be done in order for the landlord to be able to make an informed decision about whether you should be the residing tenant of his property. It is also important in general to check your credit rating to ensure you are aware if you have made any late payments and check on any identity theft that may have occurred.

couple being approved for referencing

How should tenants prepare for referencing checks?

We would suggest that two to three months prior to your referencing check, you conduct a credit check.

The following websites are examples of where you can see your credit, which is often reported with a score:

  • Experian
  • Equifax
  • Clearscore

You should then look to dispute any inaccuracies shown on the report. This could be something like a statement about not making payment when you in fact have.

Your credit report dates back six years, so if you have had any problems in the past, these will come up. If your landlord is unhappy with your credit history then you will need to negotiate with them on how this will impact your tenancy. If you have a bad history, then you may have to offer up evidence that you are not a risky tenant for the property. This might include a copy of your payslip to show that you will still be able to make payments on time for rent and to cover any debt that you may have.

Can I use a guarantor to help with referencing checks?

A rent guarantor comes as either a person or company that will vouch for your rent if you are unable to make payments during your tenancy period. If your landlord is not convinced that you will be able to cover your monthly rent, then they have the right to request a guarantor from you to allow you to rent the property. For some people this can often be a family member.

This person will need to be more financially stable than you are and again credit checks and references must be made on their behalf as confirmation for the landlord. The guarantor will then have to sign the contract alongside the tenant to bind them into the contract.

It is important to be cautious and prepared when you go through the tenancy referencing checks. Your past behaviour and patterns will be openly available for your potential landlord to see when it comes to credit checks and previous references. Therefore it’s important that your experience as a tenant is taking care of the properties you rent and being cautious with your finances so if you move property in the future you won’t be affected by this.

However, even if you have financial fluctuations in pay or a poor credit rating, this can also be negotiated with your landlord by providing a guarantor. These situations are very much solvable but it is understandable that your landlord will want to have confidence in you renting and taking care of their home, which is why it is necessary for them to do these essential checks.

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