Can Bad Credit Stop You from Renting a Property?
Updated: November 15, 2023 Author: Paul Gillooly
Quick answer: Yes, having bad credit could stop you from renting a property.
The following could help provide landlords and letting agents with peace of mind even if you have a bad credit score:
- Provide proof of financial stability
- Use a guarantor/ co-signer
- Be honest about your credit history when applying
- Offer to pay more rent up-front
If you have a bad credit history, you may be concerned that this could affect your chances of securing a rental property. Renting a property may be trickier if you have a low credit score, but it’s still possible.
For those who have a good credit score, being accepted for a rental property should be much easier. If you don’t have a good score, there are some tips below that could increase the chances of being accepted for your next home.
Will I pass a credit check for renting?
First things first. What is a minimum credit score to check, and why is this important to consider?
A credit check is a standard procedure that banks or lenders usually carry out to establish if you’re a reliable borrower to determine whether they want to lend money to you or not. Credit checks are also often carried out by estate and letting agents, to ensure that you have a good track record in spending and can afford the rental payments you’re signing up for.
If you have a low credit score, you may still be able to secure a rental property, but the process may be more difficult for you.
Factors That Influence Credit Checks
Several factors can influence a credit check, which may help you determine whether you’re likely to pass with flying colours or if you need to work on some of the elements that affect your score.
Here are a few key points to consider:
The main element that a credit check looks at is your credit score. A low credit score may raise a red flag to potential landlords, as it could indicate that you don’t have a good borrowing history.
However, landlords will have different thresholds and may offer more leniency than others regarding renting with bad credit ratings, as a low credit score doesn’t necessarily mean you can’t afford the monthly rental payments.
Rental history is another key point that’s considered in a credit check. If you have a history of evictions or late rent payments, this may negatively impact your credit check and result in estate agents/landlords refusing to let property to you.
A record of on-time rental payments and good relationships with landlords can help to offset a low credit score and improve your chances of passing a credit check.
Another factor that can influence a credit check is your debt-to-income ratio. This compares your income with your outstanding debts to help a landlord establish whether you’re likely to afford your rent alongside existing monthly debt payments.
If you have a lot of debt that you’re not making regular payments to, you may fail a credit check on this basis.
How can I improve my chances of being accepted?
You can improve the chances of securing a rental property, even with a poor credit score or a bad credit history.
Be Upfront and Honest
Simple advice you should take when applying for a rental property is to be upfront and honest about your credit history. This can help you build trust with estate agents and landlords as it shows that you’re not in the habit of hiding your financial or poor credit history behind.
Explain in detail why your credit score is low and show them why you’re confident you can be trusted to afford rental payments moving forward.
If you have bad credit, a guarantor/co-signer with a good credit rating can reassure landlords that they’ll receive rental payments on time, even if your poor credit history suggests that you may not be able to keep up with these yourself.
A guarantor/co-signer can help to increase the chances of securing a rental property by mitigating risks involving unpaid rent or property damage. Almost anyone can be a guarantor. However, a parent/spouse is often considered first.
Choose someone you fully trust and assure that they have a good credit rating to increase the likelihood that a credit check will be passed.
Proof of Income
Supplying proof of income can help pass a credit check as it shows that you can have regular wages coming to pay rent back in and, therefore, can afford ongoing rental payments.
Proof of income could include pay slips, tax returns, or bank statements, and would demonstrate regular, steady income to reassure landlords that you’ll be able to pay your rent on time rent in advance, each month.
References are golden when it comes to credit checks. Both personal and professional references can demonstrate your reliability when making regular payments and provide reassurance that you’re of good character.
If you had a good relationship with a previous landlord, this would make a fantastic reference as it shows that you’ve been able to keep to regular payments in the past and may help a new landlord to overlook a low credit score.
Private landlords are worth researching if you have a low credit score, as they may be more lenient than estate agents regarding credit checks.
There tends to be more understanding of specific situations when renting from a private landlord, plus private landlords tend to be more open to negotiating terms such as rental payments/contracts.
Improve Credit Score
If in doubt, you could always look into improving your credit score to increase your chances of passing a credit check. You can do this in many ways, including making regular, on-time payments toward bills/debts and making sure there are no errors on your credit report, such as typos in your name, address, or contact information.
However, it is worth bearing in mind that improving your credit score can take time, and it would be worth considering some of the above advice if you’re looking to improve your chances of securing a rental property in the near future.
Hopefully, this information has comforted you in that it is possible to rent a property with bad credit; you may have to take a few extra steps to increase the chance of passing a credit check.
Some key points to remember:
- Provide a history of financial stability
- Use a guarantor/co-signer
- Always be honest about your credit history
- Work on your credit score in the long term to increase your chances of securing rental properties in future