We’re all familiar with having to fill in forms when applying for a new job, attending interviews, and perhaps showing your passport to prove you have the legal right to work in the UK. Getting a new tenancy agreement on a rented property can seem like a similar process, with forms and evidence to be supplied. In many situations there is another level of checking too – the Adverse Credit Check. This mainly applies to people who are applying for jobs where they will be controlling accounts or have access to cash, but also to prospective tenants wishing to move into private rented accommodation.
Why Do Employers or Landlords Want to Check?
From an employer’s point of view, they want to make sure that people employed in jobs where they have access to other people’s money aren’t in a shaky financial position themselves. They are concerned that people who are struggling to make ends meet may be tempted to dip their hand into the till. In other situations, such as people who join the police or prison service, the concern is less about direct theft, and more about being targeted for blackmail.
Many positions in the legal and financial services industries have the legal requirement of a credit check before the employee starts.
From a landlord’s point of view, they want to make sure that anyone given a tenancy agreement is going to be able to afford the rent every month as managing tenants who can’t pay can end up costing the landlords thousands in legal fees.
Carrying Out the Credit Check
Employers or landlords can’t carry out a credit check without getting your permission first, and it’s usually clearly stated in the job advert if a credit check is needed. Each employer will have their own process for completing adverse credit checks, and most will use an external agency to help them. Usually, all you will be asked to give as a job applicant or prospective tenant is your name, date of birth and address, and to sign something consenting to the checks.
Adverse credit checks will look at your credit score as with any other sort of credit check. Employers aren’t really interested though in how much credit you have and how much you owe on your mortgage. Adverse credit checks look for any “red flags” on your credit history such as regular missed payments, defaults, county court judgements (CCJs) or other evidence that you are in financial difficulties. Every employer or landlord will have their own criteria for success or failure. Similarly, employers might be happy to overlook a few late payments for a junior position but will apply much stricter standards to senior level vacancies.
Soft Searching
Every time you apply for a new credit agreement like a loan or a credit card, the application appears on your credit file, whether the application is accepted or declined. Making lots of applications in a short period can make it harder to get credit as lenders get the impression that you are desperate. The good news is that adverse credit checks are known as a “soft search”, which means they will not appear on your credit file in the same way and will not affect your overall credit score.
Looking at your credit score is easy, using one of the apps or websites run by Equifax, Experian, or TransUnion. If you think there is something wrong on your file, then you can ask to have it corrected. Keeping an eye on your credit score over time can also help you track whether the decisions you are making have a positive or negative effect on you score.