Whether renting or buying, a good credit report is vital

Posted in 'Mortgages' by Barry Stamp

15 November 2011

One in every five of us will be renting within 5 years, compared to one in every 13 of us in the 1980’s, and this is down to the lack of availability of mortgages and steep deposits making it almost impossible to get on the mortgage ladder, according to a new report published by Savills, the estate agents.

Getting a mortgage has never been an easy job to be fair. Raising a deposit is just the start of it. All mortgage lenders are looking to take on as little risk as possible, and the lower the ‘loan to value’ ratio, the lower the risk. But even someone with a massive deposit will still need to have a good clean credit record.

Errors on credit reports are relatively rare, but when they do happen, they can cause absolute chaos, and none more so devastating than when an error is discovered during the mortgage application process. Emotions run high and it takes time to put errors right. Houses can be lost during the time taken to make the necessary correction. So it makes sense to check your credit report regularly, and to monitor it so that it is free from error and remains free from error.

If you subscribe to our Multi Agency Credit Report service you can do just this. And it’s completely free to trial the service for 30 days, then just £7.99 per month afterwards, for the most detailed credit report available in the UK.

Even if you are renting, you can’t afford to let your credit standing be neglected. The National Landlords Association (NLA) has urged landlords to carry out credit checks on prospective tenants, and claimed that many are taking unnecessary risks by not doing so.

Landlords are not allowed to check your full credit report – the version that most lenders see when you make an application for credit – but instead are able to access a version known as your public credit report. This is the same version that prospective employers will check if you apply for a job for an organisation such as the police force or for a position in the financial services industry.

Typically, they’ll be checking that you don’t have any CCJs, bankruptcy or other court action recorded against you, and that you’re been registered on the electoral roll. They won’t be able to see whether you’ve missed payments on your credit card, or indeed any of your detailed credit history.

It's obviously good practice for landlords to check out tenants before handing over the keys, it’s even more important that consumers understand what is held about them on their credit report.

Our Multi-Agency Credit Reports allow you to check the information that lenders will use to assess any application for credit that you make as this is reflected in the reports based on Callcredit and Equifax data. The report based on Experian data is much less detailed, because it is your ‘public credit report’ but you can easily see the exact extent of data that a prospective landlord or employer will be checking when you apply to rent (or even if you apply for a job).