Check it out! The most commonly asked questions about credit checks and referencing

Oct. 2, 2015 - PRLog -- “Before a tenant moves into a property it is extremely important that a number of background checks are carried out,” says owner of Belvoir Melton Mowbray and Belvoir Bingham Charlotte Baker. “Included in these should be credit checks and referencing.”

Q: What are credit checks?

A: “Credit checks look at the credit worthiness of an individual and pick up on whether they have any previous County Court Judgements (CCJs) against them,” says Charlotte. “They also highlight bad credit history and reveal if an individual has ever defaulted on any payments.”

Q: How are they done?

A: “Credit checks are carried out through an official credit reference agency,” says Charlotte.

“To fulfil the process we log on to their website and fill in all the information that is needed, including the tenant’s addresses for the last three years. The credit reference agency will then look at these, and if there are any addresses that the individual is linked to with a history of ‘bad credit’ this will be highlighted.”

Q: How important are they?

A: “Credit checks help form part of the final decision regarding the prospective tenant’s suitability and therefore they are extremely important,” says Charlotte. “If an individual has a history of ‘bad credit’, especially if this culminated in court proceedings in order to get payment, then a landlord needs to know. If a tenant has defaulted on payments in the past it is vitally important that you are aware of this before they move into your property.

“Official credit checks also encourage people to be open and honest with the information that they give you,” she continues. “And, in the process of asking for that information, you will get an insight into how trustworthy they are as individuals.

“If they know they’ve had bad credit, for example, or they are trying to hide addresses that they have been linked to, it will become evident. Asking them the questions needed to complete the credit checking process encourages transparency and if a prospective tenant can’t be transparent for any reason this will quickly become obvious and raise a red flag alerting you to a potential problem and giving you the opportunity to delve a bit deeper.”

Q: What is tenant referencing?

A: “Tenant referencing is a validated check to make sure that the prospective tenants will behave in a reasonable way while in the property,” says owner of Belvoir Wrexham Vaughan Schofield. “Referencing is also a way to authenticate them as individuals and make sure that they are who they say they are and that they have a right to be in the country.”

Q: What references do you collect?

A: “References are collected from the prospective tenant’s employer, their bank, their previous landlord if applicable, plus a named other who cannot be a relative,” says Vaughan. “This person needs to have known them for longer than three years and could be a neighbour or a colleague etc.

“In terms of referencing it is not enough simply to accept a written reference that the tenant gives you from an individual that they know. It goes without saying that written references that have been provided or volunteered by the person you are referencing are not going to be as objective or well-rounded as those gained independently.”

Q: How are references collected?

A: “At Belvoir Wrexham we collect our references through an approved referencing and crediting house,” says Vaughan. “However, I believe some agents choose to do this themselves in-house.”

Q: Why are these references important?

A: “The referencing process adds in another layer of protection for you and your property,” says Vaughan. “If you don’t make sure you have a quality tenant to begin with you’re a bit ambitious to believe that the end product, i.e. the tenancy itself, will be of a high calibre.”

Q: What can happen if you don’t carry out background checks, such as referencing and credit checks?

A: “Without carrying out adequate credit checks and referencing it is very difficult to judge the character and financial history of the person who will be living in your property,” says Charlotte. “Your rental property is probably one of your largest assets and, as you will be handing over its keys to someone new, it is vitally important that you are confident in their ability to look after it plus make their monthly payments on time and in full.”

Vaughan agrees. “Without references you will be judging someone superficially,” he says. “None of us are mind-readers and it’s impossible to gain a true reflection of a person’s background and character without following the correct procedures.”

Q: Why is using a letting agent useful?

“A letting agent can carry out the referencing for you and will perform credit checks,” says Charlotte. “Many private landlords do not do this and we often find that tenants who know they’ve had previous credit issues will seek out private landlords for this reason.

“As a letting agent we have certain criteria that tenants have to meet and if they don’t meet them for any particular reason then they are unable to rent that property.”

Vaughan adds, “We have a duty of care to our landlords. Carrying out full referencing and credit checks is part of this. They form part of our professional responsibility as an agent.”

• Belvoir now have over 190 offices nationwide. To find your nearest Belvoir office, visit their website at www.belvoir.co.uk

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