Need Help - arranged overdraft and credit checks 13 October 2021 at 9:10AM in Credit file & ratings 9 replies 373 views

ExpertLounger

Hello all,

I will be entering a tenancy agreement soon. I have an arranged overdraft limit of £1000 with my lloyds bank debit card and I am overdrawn by nearly £120. My letting agent will conduct referencing and credit checks soon and I wont be paid till the end of the month. My question is does this affect my referencing and credit checks or does it show that I am overdrawn? 

All the best

MEM62

The reference checks will not show your bank balance.  Even if it did, you would have no issues being within an agreed overdraft limit.  

sleepyjones

I'm not sure that's entirely true?
£1000 overdraft is quite high, so lenders might look at that more closely.  
I would maybe think about getting the overdraft reduced (or removed completely) so it doesn't look like you're reliant on it month to month.  Someone with more knowledge will be along soon to point me right though

ItsComingRome

sleepyjones said:

I'm not sure that's entirely true?
£1000 overdraft is quite high, so lenders might look at that more closely.  
I would maybe think about getting the overdraft reduced (or removed completely) so it doesn't look like you're reliant on it month to month.  Someone with more knowledge will be along soon to point me right though

It's a £1000 overdraft limit, not a balance.  It's not particularly high.

They're also not being checked by a lender.

sleepyjones

From a credit file perspective, it'll show as available credit, irrelevant of if you use it and if you're already £120 into your overdraft then it shows a dependency on using credit.  It probably doesn't matter for a Tenancy agreement but for credit applications, it might.
I thought £1000 was a lot for an overdraft?
Seems like a lot.

sourcrates

My available overdraft balance doesn't show on any of my credit files, my Bank just reports it as a big fat zero every month.

Other Banks may report differently.

sleepyjones

It maybe shows as 0 because you're not using it?
If you're £120 into your overdraft then it will presumably show it and the "limit" you have and your available credit will update to reflect that? (I'm just guessing, I've no idea)

ExpertLounger

UPDATE- ----

As MEM62 said:

The reference checks will not show your bank balance.  Even if it did, you would have no issues being within an agreed overdraft limit.  

It is true ... being in my overdraft whilst submitting my referencing application did not affect the outcome of my application. 


 

Ebe_Scrooge

The way it usually works is the credit report only shows a negative amount on your bank balance.  If you've got £10,000 sitting in your account, it shows as zero on your credit report.  If you've overdrawn by £100, you'll see -£100 on the report.  Which kind of makes sense - by its very nature, a credit report is only interested in what credit you're using, it doesn't care about savings.

Whether use of an overdraft would concern a lender - or a landlord - is a different matter.  It seems that in this case they weren't overly concerned by it.  Possibly because it's quite a low amount, possible because they can see it's not a regular occurrence (?), possibly something else.  Whatever, they will have seen it but they're obviously not unduly worried by it.

Just like applying for a loan, or mortgage, or credit card, every lender/landlord will have their own individual criteria - though in my experience, a letting agent will have less stringent criteria than, say, a mortgage lender.

MEM62

Ebe_Scrooge said:

The way it usually works is the credit report only shows a negative amount on your bank balance.  If you've got £10,000 sitting in your account, it shows as zero on your credit report.  If you've overdrawn by £100, you'll see -£100 on the report.  Which kind of makes sense - by its very nature, a credit report is only interested in what credit you're using, it doesn't care about savings.

Whether use of an overdraft would concern a lender - or a landlord - is a different matter.  It seems that in this case they weren't overly concerned by it.  Possibly because it's quite a low amount, possible because they can see it's not a regular occurrence (?), possibly something else.  Whatever, they will have seen it but they're obviously not unduly worried by it.

Just like applying for a loan, or mortgage, or credit card, every lender/landlord will have their own individual criteria - though in my experience, a letting agent will have less stringent criteria than, say, a mortgage lender.

For normal credit that is true.  However, the point is that it is a landlord check for a tenancy agreement.  Landlords only get to see information in the public domain and do not have access to financial data to the detailed level that a financial institution would have.