Get your paperwork ready if you want to rent
Lockdown has brought a whole new set of renters to the market, as couples split up under the strain and adult children plan to move out of their family home.
Movebubble, the UK’s first video rental app, has devised a guide with simple steps on how to help prepare would-be tenants when it comes to credit checks and references.
Aidan Rushby, CEO of Movebubble, says “Finding and securing a new home can be a daunting process, especially during the current climate where concerns can range from renters not feeling comfortable to physically view a potential new home to having to go through credit checks and get their head around proving employment and financial information.
“The key is to be prepared and make sure you have all the paperwork in place so that you can move quickly when you find your next home.”
■ What are credit checks and referencing? When renting a home, you need to go through various processes that determine if you’re going to be a suitable renter. For example, renters often need to earn 2.5 times the annual rent to qualify as eligible.
To verify your details, you’ll need to go through referencing and credit checks to establish your eligibility to rent a property.
The information, usually carried out by a referencing agency, provides the landlord with information about your credit history and current circumstances.
For renter referencing, you will need to provide address history, proof of employment, reference letters from previous landlords and employers, three months’ worth of bank statements, a tax return if you’re self-employed, a letter from accountants if self-employed and a guarantor if required.
The referencing company will also carry out a credit check, which involves looking over your general financial behaviour by examining your credit report.
This includes your debt/credit ratio, shows if you’ve missed any payments, if you’ve had any county court judgments (CCJs) and public records, such as if you’re on the electoral register will show how long you’ve lived at previous addresses.
Your credit report then produces a score that shows how credit worthy you are. The higher the score, the better, as you will be considered a lower risk from the landlord’s perspective.
■ How to prepare for credit checks and referencing. Get everything together, as the age-old saying goes “If you fail to prepare, then prepare to fail”
That means getting all the necessary information together and ready to go. So make sure you can prove your identity, employment, character and most importantly, that you’ll be able to pay the rent. This means producing three months’ worth of bank statements, along with information about your previous abode history and employment.
■ Do the maths. It’s wise for would-be tenants to remember that you need to earn 2.5 times the annual rent. As an example, that means to rent a property that costs £15,000 a year, the renters should earn £37,500 combined. So whether you’re moving in by yourself or with other people – be sure to work out that everyone earns enough to afford the rent and that you can prove your income.
■ Using a guarantor. Even if you fail the credit checks and referencing, all is not lost. A guarantor can provide security. They agree to pay if you fail to and must also pass a referencing process.