12 tenant reference red flags

New analysis released in October 2022 revealed the number of tenancy applications that were declined by letting agents is on the rise. Vouch found that between January and April this year, voided tenancy applications averaged 509 every month. That figure had reached 1,959 by August.

Some tenancy applications that don’t proceed are a result of failed tenant reference checks. Knowing what may trip you up before you apply for a rental property will reduce the risk of you being turned down. Here are 12 red flags that the verification process will spot. If any of these apply to you, it doesn’t mean you won’t be able to rent a property. Instead, contact us for specific advice and solutions.

1. Opening & closing numerous bank accounts: if you move bank accounts too frequently, it can be interpreted as a sign of poor money management. Stick with one account and ensure your wages are paid into this on a regular basis.
2. Missed payments: any form of missed payment contributes towards a bad credit history. This could be failing to pay off a loan or a credit card, an unpaid mobile phone bill or a defaulted Klarna repayment. Tenants can apply for a notice of correction if a late or missed payment (see below) happened for a genuine, one off reason.
3. Late payments: some credit check companies will take late payments into account as they indicate poor money management skills. Setting up a direct debit that pays off the minimum amount each month helps avoid late payments.
4. Lack of landlord references: past and current landlords will be contacted as part of reference checks. It’s an obvious worry if a landlord declines to provide a reference as their silence usually means there’s nothing good to say.
5. Not being on the electoral roll: if you are not registered to vote, you’ll almost certainly find your tenancy application declined. Start the process if you’re not registered, and be prepared to show a utility bill and bank statement as proof of address.
6. Cancelled credit cards: despite it sounding counterintuitive, cancelling unused credit cards can adversely affect your credit score. It’s sometimes better to keep multiple credit cards running with a zero balance rather than shut them down. 
7. Having no credit history: like cancelling credit cards, having no credit history sounds sensible but it’s actually another red flag. Those making checks like evidence that a tenant can successfully manage owing money. Consider a credit card where you can clear the balance on a monthly basis.
8. Ignoring open banking: credit referencing companies can better assess how financially responsible you are via open banking. When you share access to your bank accounts, referencing companies can see if you keep up-to-date with bills such as Council Tax and even your Netflix subscription. This is good for tenants who aren’t keen on taking out credit.
9. Moving home frequently: although it’s sometimes unavoidable, frequent changes of address can set off alarm bells. People who can’t pay their rent often move numerous times, so try limiting the amount of past addresses you’ll need to supply. 
10. A County Court Judgement (CCJ): a County Court Judgement (in Scotland, a CCJ is known as enforcing a debt by diligence) against a tenant is a court order that’s issued when money is owed. If a CCJ is paid in full within 30 days, a court can remove this from a credit file, on request.
11. Not having a bank account: a tenant reference check will usually involve examining three months’ worth of bank statements. This is done to establish whether the tenant earns enough money to pay the rent, and whether they have enough savings to pay the deposit. 
12. Not having the correct paperwork: a mandatory part of a tenant reference check will be a request to see photographic ID. Identification is also an integral part of compulsory Right to Rent checks. Use this Government list to ensure you have the right documentation required before you start a tenancy application. 

Our lettings team is here to help renters pass tenant reference checks. We can explain how guarantors and paying a set amount of rent upfront may help your application.