If you want to rent a property in the UK, then almost all private landlords and letting agents will ask for a reference, including a request for information about your credit history.
Whether you think this is fair or not, landlords are keen to know if a tenant moving into their property has a history of paying their bills on time. But this excludes several groups of people, including those who have not rented before or had only recently started their journey into the world of credit (known as having a thin credit file) plus people who have a poor credit history.
It also includes international students and foreign professionals who want to rent a home while they work here, neither of whom are likely to have any credit or renting history in the UK.
Landlords are more likely to reject all of these people, and this makes finding a property to rent problematic.
Not knowing how to rent a property with bad credit can be tough enough, but what do you do if you don’t have a guarantor either? Find out the answer and learn how to rent with bad credit in our guide.
If you’ve ever lived in a rented house or flat though, you’ll also know that if you have a bad credit history, it can influence whether or not a landlord or letting agent will approve your application. Some landlords may also want you to get a guarantor to cover your rent if you do have poor credit, so what can you do if you’re also unable to get a guarantor?
1. Get a family member or friend to be a guarantor
Letting agents and landlords will rent properties to you if someone else who does have a good credit history agrees to be your guarantor.
This can be a friend or family member, who will be asked to sign a guarantor document that commits them to pay your rent if you are unable to, including any rent arrears, and also pay for any damage you cause to the property. But remember this is a serious position to put a friend or relative in; they are jointly responsible for paying the rent on the property as well as damages.
2. Pay for a guarantor service
If you don’t have a friend or relative who’s prepared to stand as your guarantor, then there are several companies who, for a price, will stand as guarantors for you. The prices vary but expect to pay approximately £300 or more depending on your circumstances. Also, you will be asked to sign a contract or ‘guarantor deed’. Most of these companies will ask you for proof of identity and salary and require that you earn at least 1.5 times your rent. If your rent is £600 a month then you’ll need to be taking home at least £900 a month after tax.
3. Upgrade your credit history
Another option is to improve your credit history and, while you do it, continue living in your current accommodation. There is no rule of thumb about how long it takes to improve your credit history. It’s reasonable to assume that you’ll need approximately six to 12 months of new credit history to improve your score.
This is also where CreditLadder can help. If you are already paying rent, then your monthly payments to your landlord can be recognized via our online service, and this track record is added to your credit history.
4. Pay your rent in advance
The easiest way to circumvent the guarantor system is to pay your rent in advance, usually in a lump sum representing between six and twelve months’ rent. It’s how many international students secure places to rent in the UK. This kind of money is difficult for most young or credit-impaired tenants to amass who, by definition, are unlikely to be awash with spare moolah. The final option is to ask a friend or family member to lend you the money to pay your rent in advance.
5. Rent in a shared house
Another way to circumvent the credit referencing process is to move into a shared house that already has a tenancy running but whose tenants need to refill their ranks after someone has moved out.
Because all tenants in a shared house are responsible ‘in common’ for the rent, the landlord or letting agent may be happy to let you move in without credit referencing you, assuming the other tenants agree.
You may find it easier to get accepted by landlords if you approach them directly.
Landlords who don't use a letting agent are less likely to carry out credit checks, but they may need proof of your financial circumstances and renting history.
Social media groups and online forums in your area may have details of properties available to rent direct from landlords. Check with friends, family, and colleagues to see if they can recommend landlords in the area.
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