Why tenant credit checks are a fraudster’s paradise
As a letting agent or landlord, the selection of the right tenant is of vital importance to ensure the smooth running of the tenancy and every effort at the referencing stage should be made to fully understand the applicant’s situation. Letting agents and landlords that rely solely on a credit check (with or without supporting copy documentation) are potentially making themselves an easy target for fraudsters and the less than honest applicant.
So what makes a credit check such a risk? The main areas below provide an insight into why a tenant credit check is absolutely no substitute for experienced professional full referencing.
False documents “proving” address information
Credit search results are accessed by providing the individual’s name AND the property addresses where the person has been living. If an address is searched where the person has no connection, the credit check result will be shown as being clear. Only the “open” electoral register can be searched, so those individuals who have opted out from receiving mail from marketing companies etc. will not be listed. Add to this that a large number of tenants simply do not bother to register at short term addresses and you can see why many applicants are not located on the electoral register.
Where a person is not listed, it is of vital importance to verify address information is indeed relevant to the individual. This is why it is normal practice to obtain documentation which links the person and the address.
However, for a fraudster, documentation is a simple task to provide and in any format. To see how easy it is, search “novelty bank statements” via Google. You will note there are numerous firms providing a false document service, and to the untrained eye, these documents can easily be accepted as being genuine.
Limited search information results
High Street finance is invariably based around a credit score with lenders having access to the individual’s payment performance on current and previous loans/credit cards. However, in the tenancy world this information IS NOT available; only public information such as CCJs, Bankruptcies and Individual Voluntary Arrangements (IVAs) can be accessed and any score produced is mainly based on public records. Just because a prospective tenant is shown as having what is perceived as a pass score does not mean they pay their bills!
What is their home status and income situation? Is the income situation set to change?
A credit search cannot confirm this.
In reality, what does a credit check actually bring to the table? Not a lot is the answer. Hopefully this article has provided you with an insight into the dangers and limitations of relying on tenant credit checks.
What is the solution?
There really is no substitute or shortcut to fully referencing your tenants, and at Diligent, our job is to get to the truth. With an average response time within 24 hours, our referencing is fast and efficient and with our personnel having the experience of over 1,000,000 tenancy applications, we fully understand what makes a good tenant and the methods used by the less than honest applicant.