How much does a tenant credit check cost?

You’ll need to add the cost of running a tenant credit check to your overheads when becoming a landlord. You’ll be pleased to know that they aren’t ridiculously expensive as long as you know what you’re purchasing.

Every landlord wants to know the credit history of their tenants to avoid any financial arrears and to ultimately understand who will be living in the property.

Credit checks present crucial information regarding your tenants which includes:

• Name and date of birth
• Address and previous addresses
• Financial links to other people
• Current account details and overdraft
• Any credit taken out
• CCJ’s (county court judgements)
• Whether the person is on the electoral register
• Convictions of fraud
• If the person has been a victim of identity theft

Breaking the cost of a credit check down

There’s some varying factors which make up how much the credit check on your tenants will cost you. Whether you have a single occupancy property of professionals, DSS (department of social services) tenants or students in a HMO (home of multiple occupancy), the cost will differ. More occupants equals higher costs on credit checks. However, there are some deals to be had out there through third party service providers.

The difference between soft credit checks and hard credit checks

Firstly, you need to know that you’re only required to take out a soft check on your prospective tenants.

A soft check doesn’t not affect their credit score down the line. You may want to explain this to your tenant and put any concerns they may have to rest. However, major resistance to a credit check could suggest there is a financial history which would make them unsuitable and unreliable tenants.

Getting consent from your tenants

Remember you will need written consent from your tenants before you carry out their credit check. It is not a legal obligation for you to carry out a credit check but you’ll have the security of having a clearer picture of your tenants and their reliability from the start of the agreement.

Who pays for a tenants credit?

The payment of the credit check through a third party is your responsibility to cover as a landlord. Imposing the charge or writing the charge into the AST agreement is unenforceable. If you do attempt to do this, you may face a discrumpled tenant reporting you to Trading Standards.

The price of tenant credit checks UK

A tenant credit check in the UK can range between £5 – £30. Landlords should expect to pay between £15 and £20 on average for a complete soft check. Be weary of credit checks being very inexpensive as you may not be getting a fully comprehensive check. Similarly, if you’re paying over the odds for a credit check double check for any unrequested add-ons.

It’s always best to go to a reputable credit check service provider. The UK’s largest providers are one of these three; Experian, Equifax, or TransUnion. Of course you may want to shop around and if you’re a member of NRLA (national residential landlords association) you may find good alternative recommendations through their short list of service providers.

Understanding your tenants financial situation

Getting in the know with your tenants financial status will inform how you then take action after the credit check.

Strategically, landlords of multiple property ownership buy with the intention of appealing to different tenant demographics. Just because you’re drawn to the professional market, the economic climate can hit and affect what is usually seen as a stable tenant demographic.

Similarly, the student market at first glance appears to be full of tenants who perhaps won’t have the upkeep of your property at heart. However, this market is reliable and steady with the backing of financial support from loans and parental guarantors.

Landlords are purposely choosing a variation of properties to spread the risk should one market collapse and effectively hit their income stream.

You shouldn’t hesitate renting your property to DDS (Department of Social Services) tenants, students or professionals. CIA will tailor your policy to suit your needs as a landlord no matter what category of tenants you take on. From loss of rent cover to building and contents cover, CIA are ready to give you a quote today.