First of all there are three things landlords really care about with tenants:
- You check out positively on your report
- You pay your rent on time, every time
- You take good care of the property.
Professional landlords and agents always check out their potential tenants very carefully. You may think that the Tenancy Application Form asks for some very personal information, but this is normal practice and quite acceptable. If you go to your bank for a loan you will be asked the same questions; taking on a tenancy is no different because you are applying for a legal interest in a high value asset – the property!
Complete the Application Form accurately and honestly and admit up-front if you suspect there may be reasons why you would obtain a low credit score or a bad reference. Waiting until the checking process uncovers this will put you in a bad light, whereas admitting it often results in concessions being made.
The main thing the landlord / agent is looking for when you apply for a tenancy is that your earnings, or the joint earnings of you and a partner, are sufficient to cover the rent. As a very rough guide, your rent should be no more than one-third of your total gross income, providing you have no other major regular payment commitments.
Making late or missing payments to existing lenders, credit card issuers and landlords are the ultimate no-no. A missed or late repayment can stay on your credit report for at least three years and lenders may assume that you're an unreliable payer as a result. If you're having problems talk to the lender or landlord to see if you can reschedule or delay a payment until you get things sorted out.
Think about it, how would you react if your employer continually missed your wage payments, or it was always late? In this situation you are always anxious because you cannot plan your own finances. In the case of a landlord, perhaps with a big mortgage to pay, this anxiety will spill over and spoil any landlord / tenant relationship.
Make sure there's enough money in your account each month to pay your rent and pay it on time, every time. Where payments are made by standing order or direct debit it's a good idea to arrange an overdraft facility with your bank to ensure that payments are never missed.
If you mis-manage your current account and credit cards you risk damaging your credit rating. Going over your overdraft limit without permission, bouncing a cheque, not having enough money in your account to pay a direct debit or paying your credit card bills late can all leave bad marks on your credit report and set alarm bells ringing for lenders and landlords.
Landlords appreciate tenants that look after the property and will encourage you to stay as long as possible if you do. Otherwise, you will be asked to leave at the earliest opportunity, usually after the first 6 months.
Professional landlords / agents always complete a comprehensive inventory on in-going and out-going. This will record very accurately the condition of the property (usually with photographs) at both points in time, so any damage recorded could be down to the tenant to pay for. This is usually taken out of any deposit paid, but can sometimes results in a court claim if there is a disputed amount.
Legislation now ensures that landlords must protect the deposit independently (The Deposit Protection Scheme), so that if a dispute arises the final decision on who pays for damage lies with an independent arbitrator or a court.
If you're not on the electoral roll where you live, it's very likely to adversely affect your credit score. Lenders and landlords like to see stability and being on the electoral roll is a simple way for them to check your name and address are correct.
As a tenant you may have moved around quite a bit, but try to ensure that your electoral role records are updated on each move as gaps in these records may affect your credit score each time you are checked out for a tenancy. Checks often go back as far as 6 years.
The register is updated every month, so you can re-register at any time with your local council. If you have recently moved house you will need to register again under your new address. If you are not eligible to vote and can't register you may be asked to provide proof of residence when the checks are carried out.
Each time you apply for credit it leaves a footprint on your credit report. This footprint does not indicate whether or not your application was successful, just that you made an application. If you made many applications in a short period of time it will be assumed that you are being turned down.
The assumption is you are struggling financially and desperate to borrow money or they may even suspect fraud. So, if you're just seeing what finance rates are available to you, ask the lender for a quote as opposed to a full credit application.
When you apply for finance or a tenancy the lender or landlord will look at what credit you already have available to you. If you're heavily committed or up to the limit on several credit cards, for example, the lender may conclude that you are not in control of your finances.
This is the case if you're not using all the credit available to you by having more cards than you need; the lender may still reject your application because there is a risk that you could suddenly go out and run up a serious debt – it's a good idea to close any accounts and cut up any credit cards you don't use or need.
Borrowing too much can put lenders off, but also not borrowing at all or having no bank account or credit cards is just as bad. Lenders or landlords will look at your credit history to determine if you are likely to be a responsible borrower. If you've never managed any credit before they will not be able to predict how you'll handle it and you will get a low credit score as a result.
If you are financially linked to someone, like a joint account or mortgage with a partner, for example, and they have a poor credit record, this will almost certainly seriously damage your own credit rating.
One way around this is to dissociate yourself and far as possible financially from that person. If you split up it's very worthwhile informing the credit referencing agencies to ask for a Notice of Disassociation.
Always write your address the same way. For example, if you have a house with a number and a name, always make sure your address appears the same everywhere: on the electoral roll, your bank statements, credit reports, utility bills, and your tenancy application form etc.Too many variations here will damage your credit score.
Generally, the more you move house the more lenders will be suspicious; they like people who appear stable and often view those who are constantly on the move as less reliable. The statistical algorithms used in credit scoring will mark you down.
Unspent county court judgements (CCJs) and bankruptcies are a real giveaway when it comes to assessing a person's financial well-being. They will leave a big hole in your credit rating for at least six years, making it clear to lenders that you have a history of very serious debt problems.
However, all is not lost even when you do have CCJs. If you come clean from the outset, and you can show that you are making regular and reliable payments to clear the debt, you may still be accepted for a tenancy.
If someone should steal your identity and takes out loans, credit cards and builds debt in your name, it can seriously affect your credit rating. This is a nightmare situation which can take months and many hours of work to clear your good name.
Often the first time you become aware of this is when you are turned down for credit or a tenancy. It is therefore advisable to keep a watch on your bank accounts and credit card statements and regularly request a copy of your credit records from one or more of the three main credit reference agencies: Experian.co.uk, Equifax.co.uk or CallCredit.co.uk
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