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Tenant referencing: Why Landlords Shouldn& #39;t Rely On a Credit Check( A quick thread) 
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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& #39;t entirely true.
2. Tenant referencing
Tenant referencing includes all of the above plus:
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✔" title="Fettes Häkchen" aria-label="Emoji: Fettes Häkchen"> confirmation of primary and secondary ID (passport/driving license/ Bank statements etc)
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✔" title="Fettes Häkchen" aria-label="Emoji: Fettes Häkchen"> income verification
https://abs.twimg.com/emoji/v2/... draggable="false" alt="✔" title="Fettes Häkchen" aria-label="Emoji: Fettes Häkchen"> employment history confirmation/ employment reference(s)
Tenant referencing includes all of the above plus:
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& #39;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& #39;t equal unpaid rent - if a tenant& #39;s score is lower because of unpaid debt, it doesn& #39;t mean they& #39;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)
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A complete reference isn& #39;t just a credit check and some ID. It& #39;s an entire process of verifying tenant suitability.
A complete reference isn& #39;t just a credit check and some ID. It& #39;s an entire process of verifying tenant suitability.
@ Lets So Simple it& #39;s easy to determine tenant suitability as we pre vet all applications (before viewings) by completing a rent passport. (Which doesn& #39;t harm their credit file)This automatically confirms how much a tenant can afford based on their total income.
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