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Do I need a credit card to rent?
Sometimes, when you’re getting things lined up to start renting a property, your landlord may ask for you to pay your rental deposit on a credit card. But, you might be wondering if owning a credit card is essential if you want to rent.
While you might not necessarily need a credit card to rent – as it all depends on the individual landlord – having a good credit history is usually quite important if you’re hoping to rent a property.
Your credit history may play a part
More and more landlords now carry out credit checks on their potential tenants – either by themselves or through an agent – which means having a credit card that you’ve used responsibly could stand you in good stead when your landlord checks your credit history.
It’s usually your income and outgoings that are most important to your potential future landlord when they assess your finances, but it’s likely they’ll have an interest in your credit history too. This is because they want to be reassured that you manage your finances well, as they want to minimise the risk of you falling behind with your rent. The best indication they can get of whether you’ll pay your rent reliably each month is from your credit history.
So although having a credit card is not strictly necessary, it might be a benefit if you’ve got one that you use responsibly as this may mean your credit history is above average. Of course, a credit card isn’t the only thing that could have impacted on your credit history.
If you haven’t checked your credit history recently, you can do so for free using ClearScore or Noddle. From here you’ll be able to see how good your credit history is, so it’s a good idea to give it a look over before you think about renting.
Depending on the landlord, if you’re able to make a larger up-front payment then they ask of you – say a couple of months’ worth of rent – then your credit history might not affect your chances.
Use a credit card for added protection
Although you may not be required to have a credit card to rent, it might be worth paying for your rental deposit – or at least part of it – with your credit card.
By doing this, you’ll be able to benefit from Section 75 of the Consumer Credit Act, which offers you protection on purchases between £100 and £30,000. This means you should be able to claim the money back from either the landlord or your credit card provider should something happen that means you lose your money – such as if the letting agent goes out of business or disappears.
However, some landlords or letting agents won’t let you pay for the deposit with a credit card at all, so you should check this beforehand. Not only this, but it might be harder for you to get a refund if you give your deposit to a letting agent. This is because it’s often a more difficult process if your money goes through a third party rather than directly to your landlord.