21 Feb 2020, Author:

A failed credit check can be a depressing experience. Whether you were hoping to get some finance for DIY or a holiday, or it was a tenancy credit check that would have meant a new home, failing a credit check can feel like a big step backwards. So what can you do if you have failed a credit check and need to reconsider your approach?


Why do credit checks exist?


They are designed to help establish affordability and whether or not a loan, tenancy agreement etc is right for you. You might come across a credit check when you apply for a mobile phone contract or a new broadband package that you want to pay monthly for. If you want to sign a new tenancy agreement you will also have to go through the process – if fact, a failed credit check for renting is a pretty common experience.


What happens if you fail a credit check when renting?


Usually the first step will be to find out why you failed the credit check for renting. Unlike a loan situation, if you have failed a credit check for renting there may still be a way to go ahead with the tenancy. This will depend on the landlord, or their letting agent, and how willing they are to negotiate with you to keep you as a tenant. When it comes to tenancy agreements there are usually two main alternatives if a check credit has failed:


  • Up front rental payments. As a credit check is designed to establish that you can make ongoing rental payments, you can reassure the landlord by offering to pay in advance and up front. You will obviously need to have access to enough cash to do this in order to make this option viable.
  • Using a rental guarantor. Many landlords will also be willing to accept a guarantor if you have failed a credit check. A guarantor will agree to step in and make the rent payments if you’re not able to do it.


Credit check failed reasons


Sometimes it’s difficult to understand how you can fail a credit check. There may be many reasons for failing a credit check and these are not always the most obvious. Some of the most common reasons for failing a credit check might include:


  • There was no way to confirm your identity and address. You may have failed a credit check, not because of any financial issues, but due to the fact that the lender (or landlord) couldn’t confirm who you are and where you live. This often happens if you are not on the electoral roll, for example.
  • You don’t have much, if any, credit history. It can be just as difficult if you have never borrowed anything or signed up for any credit contracts than to have worked your way through a large volume and not stuck to your responsibilities. Credit checks are designed to establish how good you are with credit so if you have no credit history at all this will be hard to do.
  • You have a history of credit problems. Something as small as missing a single repayment on a loan can cause issues when it comes to a failed credit check. If you have defaulted on a loan or gone bankrupt in the past as a result of not being able to pay your debts then you are also likely to have problems when it comes to a failed credit check.
  • Mistakes in applications. A failed credit check for renting could be the result of something as simple as your previous addresses not being input correctly, or a mistake in the spelling of your name. The reasons for failing a credit check could be as basic as the person who carried out the check being careless in this way so it’s always important to make sure that the information that you’ve given has been correctly recorded.
  • Your credit report is connected to someone else with a negative credit history. Sometimes the reasons for failing a credit check aren’t related to your own situation. For example, if you were previously married and shared a bank account with your ex who has now gone bankrupt this may affect whether or not you can pass a credit check. It’s important to make sure that any link between your finances and those of historic partners, whether a spouse or ex housemate, have been financially severed.


If you fail a credit check then you need to find out why before you do anything else. In a renting situation you may be able to agree another option with the landlord – such as a rental guarantor. And if you’re hoping to borrow money then you might just need to find a different lender or correct mistakes in the application process.

Still confused? Have a read of our blog which explains “what is a credit check?”.  And here’s a list of the numerous things you can do to improve what’s in your credit file.