Help! Poor credit - can we rent?

Confused123456

Hi All,

I am wanting to get a realistic view on whether or not we will be able to rent a property we love, this is quite long, but would really appreciate some feedback if you can spare the time. We really like a house that is up for £650 pcm rent, but don't know if we will qualify for it and don't want to hand over £400 - £200 pp- (non-refundable) for checks if we have no chance of getting it. Our current situation is:-

Property History:
I own a 1 bed property which we currently rent out to someone, we receive rental income for this. I have owned this property for 11 years (it is in my name, not joint with my husband). We rent the 2 bed property we currently live in and have lived here for nearly 4 years - this too is in my name and my husband is not on the agreement. We have a son and are now expecting twins so need to up to a 3 bed, this will be a joint tenancy for the first time, as it seems mandatory now that both names are on the agreement.

Financial information:
Both my husband and I work part time and receive additional rental income, tax and child credits, child benefit and local housing allowance. Our total combined income is between £2000 - £2400 pcm (including all of the above). I am Self-Employed, so the minimum we receive is £2000 combined (it just depends on how well the sales do each month). My husband gets £550 pcm from fixed permanent employment, he has been with this company for 3.5 years.

Due to this, we are classed as 'low income' (as neither of us work full time) and in receipt of local housing allowance.

Financial History:
5 years ago I had severe depression which I am still picking up the pieces from. I stopped paying my bills, cut off friends and family etc and got into a mess in summary. Once the recovery process started working I began to get things back on track. However, I now have 2 defaults from 2012 on my credit file that bring my credit report score crashing down to 'poor' on Experian (625), nothing else is affecting my score, it is literally just those. Prior to that I had never missed any kind of payment for anything and bought my house at 18, so it was really a very good report, this has demolished it. For the last 4 years, since getting back on track, I too have never missed any form of payment, but this has no bearing with defaults it seems and leaves my score in this state regardless. I have only come off maternity in September 2015 so my self-employed accounts can only verify the current income for me from that point (9 months). (I can prove the rest -rental income, tax/child credits/ child benefit and LHA going back 4 years.)

My husband on the other hand has an 'Excellent' rating (994!!!) it's flawless. I have always dealt with bills, mortgage, rent etc, so this has had no impact on him whatsoever, which I'm hoping will work in our favour?

My concern is they will run a credit check, see we are classed as low income and that we are in receipt of housing allowance and the application will be rejected because of my poor credit added on top.

They are charging £200 per person to do all of the checks, so £400 is a lot to give if it is simply rejected - hence my questions.

The positives: we have never missed any rent or mortgage payments and we keep our current property in great condition, so our relationship with our current landlord is great, she has said she will happily give us a reference and whatever reassurances they need from her part. we have just under £6000 in savings, which they will be able to see (approx £2000 of this will go on deposit and 1 months rent upfront) and can provide a Guarantor, no problem.

But... do you think if the agency (and landlord) are given the core information, being:- low income, local housing allowance and one has poor credit with 2 defaults - he will accept or run a mile?

Just need some honest feedback, if we can't rent, then we can't, that's fine and I can deal with it and look at alternatives, but I don't want to give them the fees as it's quite a lot of money to just throw away.

Any feedback would be greatly appreciated!

Many thanks

FBaby

No-one can tell you as it very much depends on the demand and supply in your area and the type of home you went to rent. More importantly, it totally depends on the landlord. One landlord might consider you high risk (in all honestly, I would due to the main income being reliant on your self-employment and tax credits) but another landlord might be reassured that you are a working family who can evidence paying rent on time and that might be good enough for them.

WombleBat

I am self employed and had to pay 12 months rent in advance, one of the guys that works for me is PT and had to pay 6 months upfront for his. Neither of us had bad credit ratings though.

I assume that the council know you own another property as assuming you have over 10k in equity + 6k savings you would normally not be eligible for LHA. (May be wrong about this though).

HappyMJ

Confused123456 wrote: »

Hi All,

I am wanting to get a realistic view on whether or not we will be able to rent a property we love, this is quite long, but would really appreciate some feedback if you can spare the time. We really like a house that is up for £650 pcm rent, but don't know if we will qualify for it and don't want to hand over £400 - £200 pp- (non-refundable) for checks if we have no chance of getting it. Our current situation is:-

Property History:
I own a 1 bed property which we currently rent out to someone, we receive rental income for this. I have owned this property for 11 years (it is in my name, not joint with my husband). We rent the 2 bed property we currently live in and have lived here for nearly 4 years - this too is in my name and my husband is not on the agreement. We have a son and are now expecting twins so need to up to a 3 bed, this will be a joint tenancy for the first time, as it seems mandatory now that both names are on the agreement.

Financial information:
Both my husband and I work part time and receive additional rental income, tax and child credits, child benefit and local housing allowance. Our total combined income is between £2000 - £2400 pcm (including all of the above). I am Self-Employed, so the minimum we receive is £2000 combined (it just depends on how well the sales do each month). My husband gets £550 pcm from fixed permanent employment, he has been with this company for 3.5 years.

Due to this, we are classed as 'low income' (as neither of us work full time) and in receipt of local housing allowance.

Financial History:
5 years ago I had severe depression which I am still picking up the pieces from. I stopped paying my bills, cut off friends and family etc and got into a mess in summary. Once the recovery process started working I began to get things back on track. However, I now have 2 defaults from 2012 on my credit file that bring my credit report score crashing down to 'poor' on Experian (625), nothing else is affecting my score, it is literally just those. Prior to that I had never missed any kind of payment for anything and bought my house at 18, so it was really a very good report, this has demolished it. For the last 4 years, since getting back on track, I too have never missed any form of payment, but this has no bearing with defaults it seems and leaves my score in this state regardless. I have only come off maternity in September 2015 so my self-employed accounts can only verify the current income for me from that point (9 months). (I can prove the rest -rental income, tax/child credits/ child benefit and LHA going back 4 years.)

My husband on the other hand has an 'Excellent' rating (994!!!) it's flawless. I have always dealt with bills, mortgage, rent etc, so this has had no impact on him whatsoever, which I'm hoping will work in our favour?

My concern is they will run a credit check, see we are classed as low income and that we are in receipt of housing allowance and the application will be rejected because of my poor credit added on top.

They are charging £200 per person to do all of the checks, so £400 is a lot to give if it is simply rejected - hence my questions.

The positives: we have never missed any rent or mortgage payments and we keep our current property in great condition, so our relationship with our current landlord is great, she has said she will happily give us a reference and whatever reassurances they need from her part. we have just under £6000 in savings, which they will be able to see (approx £2000 of this will go on deposit and 1 months rent upfront) and can provide a Guarantor, no problem.

But... do you think if the agency (and landlord) are given the core information, being:- low income, local housing allowance and one has poor credit with 2 defaults - he will accept or run a mile?

Just need some honest feedback, if we can't rent, then we can't, that's fine and I can deal with it and look at alternatives, but I don't want to give them the fees as it's quite a lot of money to just throw away.

Any feedback would be greatly appreciated!

Many thanks

Whatever happens...do not mention the LHA. That will instantly put a lot of landlords off and letting agents won't put you forward for a property.

As long as you earn enough to pay the rent without the help of LHA then you can rent a property. The LHA that you do end up claiming after moving in can then be used for living expenses.

As has been said LHA is not guaranteed so LL's will NOT take it into account.

LL's/LA's cannot see if you have debts, defaults, arrears. They can only see if you have CCJ's. If the CCJ's are for unapid rent and have not been satisfied then it's unlikely you'll find a landlord wanting to take that risk. If the CCJ's are for other things then they can be considered.

Confused123456

Thank you for your replies.

Yes, the Local Authority know about the property - they put the current tenant forward for it. I have to declare my earnings to them every quarter and they then adjust the amount accordingly. Even without that though we would still have at least £1900 pcm, which is just above the 3x rent income threshold?

I don't know how not telling them about LHA would work as presuming they want to see my bank statements, they will see that I get a top up from them every month?

I've never had a CCJ at all, so they won't have anything to see there. They did tell me it's an in-depth credit check, rather than a statutory one, so does that mean they will be able to see the defaults? Also, one of the defaults is being disputed. I've had to complete a 'positive information sharing form' with HSBC as I (and they) can't trace where it has come from - it's with an account I've never had, so I'm not sure what happened, but it is there atm. They have said it is an error and will be wiped from my report completely but it can take up to 7 working days and I've only completed it this afternoon, so it may not be gone when they do the checks later on in the week. I asked them to confirm in writing, but they said they would only issue a letter once it had all been completed to confirm. Also, I understand it doesn't matter if you have 1 default or 10, it still bears the same impact.

Would having a guarantor give them reassurance, or would not affect it either way, or would that still depend on the Landlord?

Should I go for it, or leave it?! Should I sit own and tell them completely about the situation and then they can advise before I hand the money over or would that land me in it.

Sorry for all the further questions!

Confused123456

The other option my husband suggested is to take out a 6 month contract and just give it all up front, then after 6 months do the same (as we would have re-saved the rent by the next time the 6 months came around), or he may agree to another 6 months up front and 6 months paying month by month for a 12 month contract after testing the water with us in other areas?

FBaby

Again it will depend on how popular the property is. If they get another interested offer where both adults are working in permanent jobs you will have little chance. If however is been advertised for a month and no other offer than yours you're in with a good chance.