UK landlords would refuse tenants based on court, credit history
Almost half of UK landlords would reject a tenant with a previous county court judgement and a similar proportion said a poor credit history would be enough for them to reject an applicant. Research by tenant referencing and insurance agency Landlord Secure also found almost one-third of landlords would be troubled by tenants with debts such as credit cards or loans. Landlord Secure, which recently launched a tool enabling property owners to flag up payment histories to credit reference agencies, said the study results suggest a comprehensive credit check should form part of the tenant-application process.

Almost half of landlords in the UK would refuse to let to a new tenant with a poor credit score despite in depth credit checks not forming a part of the usual application process.

Some 46% said that they put weight behind credit history and 48% said they would refuse to take on a tenant with a county court judgement in the past while 42% would reject an application from a prospective tenant with past insolvency issues.

The research from tenant referencing and insurance agency Landlord Secure also shows that applicants with existing debts like credit cards or loans would raise red flags for 30% of landlords, while those in receipt of housing benefits would struggle to be accepted by 19% of landlords and those on universal credit would fail against 16% of landlords.

Although rent payment history does not form part of credit checks, there are increasing calls within the sector for this to become the norm, so those in rental properties can build a credit score based on regular and timely payments and have access to the same advantages as those with a mortgage.

The research report points out that usually letting agencies rely heavily on publicly available information like county court judgements or declarations of bankruptcy, which can give some insight into a person’s previous financial footprint, but not the full picture of their current situation.

The firm says that the fact that landlords would put so much weight behind credit scores suggests the market needs to make this comprehensive check a normal part of the application process.

‘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,’ said Steve Burrows, managing director at Landlord Secure and LateRent.

‘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,’ he added.

Landlord Secure has recently launched LateRent that allows landlords to report payment history to credit reference agencies, enabling them to carry out robust affordability assessments on potential tenants. It also allows tenants who pay on time to build up a good credit history.