It's common in the UK that property managers, agents, and landlords ask potential tenants about their credit history¹. It doesn't matter if you think it's a fair way or not to assess your financial situation, it's still how they determine whether you can afford to make payments on time.

The problem here is that many people are stuck with a poor credit rating not because they spent money recklessly in the past. Maybe you're a foreign worker, an international student, or someone who just got started in your financial world without enough time to build up a credible credit history. How good of a chance do you have to rent with bad credit? We have both good news and bad news, so let's find out.

1. What Is A Bad Credit Score? What's Considered Poor Credit?
2. Can You Rent A House With a Bad Credit Score?
3. How To Rent An Apartment With Bad Credit?
4. Final Words

1. What Is A Bad Credit Score? What's Considered Poor Credit?

There are three major Credit Reference Agencies (Credit Reference Reporting Agencies, Credit Bureaus, or simply CRAs) in the UK - Experian, Equifax, and TransUnion - that collect and hold consumer credit information, including your financial behaviours, accounts, and credit applications². All of them put customers into different rating categories: Excellent, Good, Fair, Poor, and Very Poor. This is a way for those to agencies to reflect the likelihood of you paying back the credit.

Each CRA has its own bands to categorize its customers' credit scores. A bad credit score falls in the negative end, usually in 'Poor' and 'Very Poor' categories, of how your financial situation looks like to them.

Credit scores of Poor and Very Poor ratings of 3 major CRAs in the UK. Source: Barclays Bank UK³

The exact scores vary between agencies, but the criteria they use to determine the level of risk in lending to you generally don't change much. If you perform poorly in one CRA, the outcome will be likely the same even if you change to another agency.

A Poor or Very Poor rating, or a bad credit score, will limit your financial options. Other companies, including private and public landlords, may get a credit report from your CRA and draw the same negative assessment if your credit score drops into categories. This means your mortgages, loans, or rental applications may get rejected outright, or even if they get an approval, you may still have to bear a higher interest rate or stricter conditions than normal⁴.

While a bad credit score may have a devastating impact on your financial life, it's not the end of the world. The score isn't fixed forever, and you can improve it by managing your finance decisions better. In the meantime, you can get around it by exploring the chance and options you may have relating to your rental or loan applications.

2. Can You Rent A House With a Bad Credit Score?

As we have said above, the door to a rented home doesn't automatically close even if you have managed to end up with a bad credit score. Different landlords have different requirements when it comes to financial situations of their renters.

Big established property managers, for example, usually have a stricter protocol to screen the rental applications. Because they provide other landlords a professional service by allowing only tenants that can pay on time, they focus mostly on applications with top ratings.

They may not only look into your credit score⁵ but also your electoral roll⁶ in order to learn more about your personal background. This includes any frequent debts, bankruptcies, court judgements and orders, and other personal finance issues and disputes that required a resolution from the court. If any of those regularities emerge when they examine your application, it would be likely to get rejected. A bad credit score alone can suggest that you have troubles with your personal finance, and you might have difficulties making rental payments if they rent you a place.

This is not always the case, however. Private landlords often don't care about your credit ratings as much as rental agencies and companies. Those landlords have different processes to accept a tenant, and plenty of them don't even run a credit rating check. In a lot of ways, you can gain trust from them and together come to an agreement even if you've got a bad credit score.

3. How To Rent An Apartment With Bad Credit?

Rent from private landlords

For companies or landlords with a strict screening process, renters usually don't have many options with a poor credit rating. The picture is brighter if you intend to scout a rented home from a private landlord, who is always easier to deal with compared to an agent from a rental company. As they don't have to follow stringent company policies set by the management, private landlords tend to have a flexible approach to renters’ financial requirements.

This doesn't mean they will agree to or accept anything (at the end of the day, landlords still need a reliable source of income), but more often than not, you can have other ways to prove your ability to make rental payments. Online forums and social media groups are a great way to find landlords in your area. You can also ask for help from your friends and colleagues to recommend you to a landlord.

Be honest with the landlord

Be friendly, responsive, and don't try to beat around the bush as your poor credit history will likely come up in the discussion no matter how hard you try to conceal it. Speak honestly to your potential landlords about your financial situation is the best way to develop trust and come up with an arrangement about this issue.

If they see you as reliable and responsible, you won't only have a high chance of reaching a rental agreement, but also build a rapport with your landlord during the tenancy.

Give them valid reasons why you have a bad credit score and why they should trust you not to fall behind with the rental payments. From those initial talks, you can suggest other options below if necessary.

Pay some upfront rent

Some landlords may set aside some minor financial issues if you manage to make some upfront payments⁷. The more you can pay in advance, the lower risk of missed payments the landlord may have. They may see this as a good indicator of future payments, and it may also set your application apart from the competition.

The law says nothing about the maximum number of weekly or monthly installations you can pay your landlord at the beginning of a tenancy. Some landlords already ask renters for 6 months of rent in advance, so this may be a good starting number you can offer the landlord.

Closely go through the tenancy agreement to make sure that your money is indeed registered as an upfront payment as the law forbids landlords from covering up illegal fees in advance rents.

Get a guarantor

When you can't afford a big upfront payment, you can ask a family member or friend to be your guarantor in the tenancy agreement. They will have the responsibility to pay the rent if you miss any payments. Depending on the contract, their liability may be extended to other conditions such as paying for damage to the property caused by you.

Guarantors are common and usually expected in student accommodation, but you can also suggest this to the landlord in case your credit score is at a less-than-desirable number.

The landlord may do a separate credit check on your guarantor or ask them to provide some information about their financial situations. Landlords usually prefer a guarantor who lives and works in the country.

A guarantor service is also an option if you don't have any relative or friend who can act as your guarantor. You will have to pay a fee for this service from those companies, who usually impose some requirements about income and ask you to sign a contract.

Get a reference from your previous landlords

The potential landlord may believe more in your ability to make payments if they can see good words about your previous tenancies. Try to ask your recent landlords for a reference about your times as their tenants. Statements of good character like that may add some weight into your convincement.

Provide proof of a reliable income

Landlords may not take any notice of your official credit rating if you can show them you have a stable income with a high-paying job. Payslips⁸ and tax returns⁹ are documents that can be used to verify your income.

A payslip has information related to your job, including your employer name, gross and net pay, and pay date. Make sure you provide the newest pay statements from the last one or two months, in printed or electronic form. Tax returns are also a credible proof of income. You should show your tax returns from last year after obtaining them from your HM Revenue and Customs account.

Rent in a shared house

Another choice you can consider is to find a shared house having a vacancy that needs to be filled. This helps you avoid dealing directly with the landlord. As long as you can afford a chip in your part each month, and your roommates are fine with it, you can get away with your bad credit score.

4. Final Words

Rent with bad credit is not completely out of the question if you can convince the landlords to trust your ability to make rental payments on time. This usually comes from proof showing a good character and a reliable income from your job and previous landlords. Just remember that they can’t save you every time. Maintaining healthy personal finance is still a good habit to have going forward to make sure you don't end up in such a tricky situation again.