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Tenant referencing: Why Landlords Shouldn't Rely On a Credit Check( A quick thread) 
Your choice of tenant is easily one of the most important decisions you make as a landlord. After all, they are paying your rent on time and looking after your property day to day.
Whilst a credit check can give you some personal and financial information, it is not enough when it comes to tenant suitability.
1. The credit check
A credit check is a summary into an individual. When you complete a credit check on a potential tenant you will have access to basic information to identify them such as name, date of birth and previous addresses.
A credit check is a summary into an individual. When you complete a credit check on a potential tenant you will have access to basic information to identify them such as name, date of birth and previous addresses.
The information available on a credit check for landlords is accessible via public data like the electoral roll and the register of judgements etc etc. Most landlords consider a credit check to be a good indication of their ability to pay rent on time, which isn't entirely true.
2. Tenant referencing
Tenant referencing includes all of the above plus:
confirmation of primary and secondary ID (passport/driving license/ Bank statements etc)
income verification
employment history confirmation/ employment reference(s)
Tenant referencing includes all of the above plus:
confirmation of primary and secondary ID (passport/driving license/ Bank statements etc) income verification employment history confirmation/ employment reference(s)
undisclosed name changes rental payments (for previous tenancies). any previous landlord references Right-to-rent checks
With this information you can cross reference the data altogether for accuracy to make sure the tenant is who they say they are.
Why you need to do more than a credit check.
1. A credit check does not cover affordability - it will show if a tenant has a good history of managing debt. So how do you work out if a tenant pays on time based on managing debt?
1. A credit check does not cover affordability - it will show if a tenant has a good history of managing debt. So how do you work out if a tenant pays on time based on managing debt?
You don't (based on that alone).There is a difference between a clean credit history and whether someone can afford a certain amount of rent each month, hence why full referencing is important.
2. Private debt doesn't equal unpaid rent - if a tenant's score is lower because of unpaid debt, it doesn't mean they're unreliable as their situation may have changed and are working hard to pay off their debt.
If a tenant has a poor score and has a clean eviction history on their reference, then this is a good sign as most people will prioritise a home to avoid being homeless.
3. Credit checks only show reported debt and bankruptcy . Lenders and creditors have no legal requirement to report to every CRA (credit referencing agency). Its possible that not all outstanding debt/payments is reported. (Esp with smaller businesses)
In summary
A complete reference isn't just a credit check and some ID. It's an entire process of verifying tenant suitability.
A complete reference isn't just a credit check and some ID. It's an entire process of verifying tenant suitability.
@ Lets So Simple it's easy to determine tenant suitability as we pre vet all applications (before viewings) by completing a rent passport. (Which doesn't harm their credit file)This automatically confirms how much a tenant can afford based on their total income.
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