With most rental properties requiring credit checks, how do you prove you’d be a reliable tenant if you have bad credit or no credit history?
It’s difficult to rent a property if you have bad credit and no guarantor. If you’ve moved from abroad, you’ve not taken out credit recently, or you’ve just turned eighteen, it can be hard to show landlords that you’d make a responsible tenant who’d pay on time every month.
We've got seven top tips that could help you secure a rental agreement - even if you have a bad credit history.
1. Check your credit history
Before you decide to put an application in, it’s a smart move to check your credit history. You can do this for free online using the three main credit reference agencies (CRAs) in the UK: Experian, Equifax, and TransUnion. You can also check your credit report for free for life through our partner CredAbility.
If you spot any mistakes, make sure you contact the CRA or lender as soon as possible to get it corrected, otherwise this could negatively affect your application.
2. Be open with the landlord about your credit history
Whether you’re dealing with a landlord or a letting agent, there’s no use trying to hide your credit history. Being honest about your damaged credit history is the best approach.
Before you head off to your first viewing, ask the letting agent about the checks that are normally carried out, or about any references they might need from you. If you do find that they carry out a credit check, sit down and have a chat about your credit history with them. Explain the circumstances, they may be more understanding than you think – especially if any negative markers were registered years ago and you have rebuilt your credit score since then.
3. Get a reference to prove your rent history
Have you lived in a rented property before (or are you living in one now)? If you have kept up to date with the rent, be sure to ask your landlord or agent for a reference showing your payment record. Being able to show that you consistently paid your rent on time will no doubt work heavily in your favour. After all, your future landlord just wants reassurance that you’re going to be a reliable tenant.
Also, if you’re currently renting, you could consider joining the Rental Exchange Initiative. This scheme enables you to report your rental payments to Experian. If you always pay your rent on time, this can help you to build up a good credit history, showing lenders that you’re responsible with money. Of course, it works the other way too, and if you pay late or miss a payment it can harm your credit score and your ability to get credit in the future.
4. Consider splitting rent with a housemate
Sometimes, living with another tenant can up your chances of passing the credit requirements – especially if they have an above-average credit history.
You might have considered moving in with your other half or a friend in the past. If you’ve got a close friend who’s also looking to rent somewhere, why not team up? You’ll be able to cut down on rent costs and it’s never a bad thing to have some extra company around the house!
Remember that you’ll both be liable to pay the rent should one of you fall behind on payments. Sharing a rental property can also work the other way – if your flatmate has a bad credit history, this could make your chances of getting accepted worse.
5. Put down a larger deposit
Another way you could improve your chances of getting your rental application accepted is to offer to pay several months’ worth of rent in advance. Only do this if you’ve got the cash spare, and make sure you leave yourself with enough money to live on.
Paying more money upfront might be a way to get your foot in the door. If you do this, make sure it’s stated in the contract, so you know if you can expect a refund if the tenancy is terminated early for whatever reason.
6. Get a guarantor
A guarantor for rent is someone who agrees to sign a legal tenancy agreement confirming that they’ll cover the rent (and in some cases damages to the property) if the tenant stops paying for whatever reason. A trusted friend or family member could be a guarantor. Each letting agent will have their own eligibility criteria, but guarantors normally need to have a good credit history and be between the ages of 18 and 75 years old.
Having a guarantor onboard may give the landlord more reassurance that the rent won’t go unpaid. So, they may be more likely to accept you as a result – even if you have a thin or bad credit history.
However, you should only ever consider this approach if you are comfortable that you’ll be able to afford the rent. Falling behind will mean that your guarantor is chased for the money which, as well as having consequences for them, could seriously damage your relationship.
Finding a guarantor
If you don’t have a guarantor, it may be worth looking for a company that will act as a guarantor for you.
Housing Hand is one example - they'll act as a guarantor for tenants at a cost. There’s no credit check involved, but your eligibility will depend on your individual circumstances and a fee will be applicable. The amount you pay depends on the cost of your rent.
There are other companies that do this, but they all will involve fees, especially an initial one that can be quite hefty, so you should always check this first.
Ask your university for help
Some universities offer guarantor schemes for students. So, if you’re currently at university and looking to rent privately, ask your university if they offer this.
If they do, they may look at things like your situation, the property, and the tenancy agreement to help them decide if you are eligible for help.
If it’s a no, it may be worth asking if they have a partnership with one of the guarantor companies.
If you’re facing homelessness
Your local council may be able to help by acting as a guarantor for you or by providing help with paying the security deposit or rent in advance. If they can’t help, they could put you in touch with charities that can.
If you think you could benefit from one of these schemes get in touch with your local council’s homeless team.
7. Build your credit score
If you’re not in a rush to rent, you could work on improving your credit score to give you the best possible chances of getting accepted for a rental property in the future.
- make sure you’re on the electoral register (so that the landlord can check your identity)
- look into credit-builder products and always pay on time
- check you’re not financially associated with anyone who has bad credit
- make any fixed payments on time, every time.
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