Posts Tagged ‘tenant checks’

What is in a credit check?

January 24th, 2012

A question that is often asked by employees, tenants, and others whom have been asked for their permission to carry out a credit check. Here we hope to provide some clarity and dispel some misconceptions.

The basic credit check

The fundamental components of a basic check are identification of any court enforced actions against the individual or data subject. These will cover:

  • County Court Judgements (CCJs) detailing the date of the judgement, the amount of the award made, and the court reference. If the CCJ has been satisfied, that is debt repaid, then this will also be recorded along with the date satisfied.
  • Bankruptcy order detailing the date of the order, the amount awarded, and the court reference. Unlike CCJs a bankruptcy order will not always have an amount of award associated with it. If the court records show that the bankruptcy has been satisfied then a date will also be given for this event.
  • IVAs, these are voluntary agreements for insolvency. Similar to the bankruptcy order there will again be dates and court references.

Additional areas a credit check can cover.

  • Risk scores identifying the potential risk of default on financial payments.
  • Corrections recorded against an individual’s credit file. For example, someone may feel that a CCJ was incorrectly recorded or that there we other related factors they wish to be recorded.
  • Credit searches, normally relating to applications for credit. When someone applies for a financial loan or credit agreement such as a mobile phone account, a search is normally conducted and a record of the event is recorded on the individual’s credit file.
  • A summary of financial accounts maintained by an individual at their address, this is sometimes used to confirm an individual’s identity and address history.
  • CIFAS records. This is available to members of CIFAS only. The database will record instances of employee fraud and related events.
  • HM Treasury and OFAC sanctions lists. These lists maintain details of individuals and sometimes organsiations convicted of fraud, or banned from investment, or suspected of involvement with terrorism (as recorded in the OFAC list).

Personal details on the individual’s credit file not revealed.
Due to data protection requirements details such as whether an individual has missed financial payments, the total amount of credit, and the specific companies providing credit, will not be revealed for the purpose of a tenant or employee credit check. Such details can only be provided in very specific circumstances.

Who should undertake a credit check?
A short answer is any landlord or employer who feels that an individual with adverse financial history will be a risk to their business or customers. There are also regulations that apply to certain areas of employment such as within the financial services sector and security sector.

How often should a credit check be undertaken?
This really depends on the business and the degree of risk mitigation required. It should be noted that a credit check can only ever provide a view for a specific point in time. Adverse financial data is normally removed from an individual’s credit file after 6 years. Additionally a CCJ or bankruptcy order may be pending and could show up against an individual a few months after a report has been provided. It is quite common for businesses to request a credit check annually but in some cases they are conducted every 3 to 4 months.

Impact of a credit check on an individual’s credit file
Every search carried out will leave a record, so whether a search is for employment screening, tenant checks, utility services, or loan application, there will be a record kept. When an individual applies for a loan the lender will normally take into account other credit applications when determining the level of risk. A credit check (as conducted by Credit Check Services) for purpose of employment screening or tenant checks will not affect the individual’s personal credit score or their ability to obtain credit.

For more information on tenant or employee credit checks visit Credit Check Services.

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Employee and tenant financial background checks – some research

November 30th, 2011
Over the last 12 months we analysed searches carried out for adverse financial history, that is people who have CCJs, bankruptcy, IVA, or Debt Management Orders.  The objective of the analysis was to identify the average frequency of adverse data and also the likelihood of finding the data associated with the individual’s current or disclosed address.

 

Frequency of adverse background data. 

 

For tenant financial background checks we found that on average there was one instance of adverse data per 9 tenants checked. The highest value of outstanding CCJs found against an individual was £390,767, the lowest value found for a CCJ was just £55, and the average in CCJs outstanding (for a tenant with debt defaults) was £1,903.

 

For employee financial background checks we found on average a much lower incidence of adverse data with less than one instance per 30 employees checked.  The highest incidence was in the security sector (security guarding) where we found 1 in 14 employees with adverse financial history.  Conversely within the banking sector we found an average of 1 in 120 with adverse financial history.

 

Association of financial background data with the current (or disclosed) address provided

 

We found 47% of adverse financial data incidents to be associated with a previous or non-disclosed address.  The incidence is skewed by the tenant sector where individuals move more frequently and thus adverse data is more commonly not associated with the current address provided. This reinforces that need to carry out thorough background checks to ensure that the person provides a valid identity for their current address and also that any searches carried out do include a full linked address search.

 

If you would like to know more about the research please contact Credit Check Services, service@creidt-check-services.co.uk


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Updated background screening reports for March 2011

March 30th, 2011

During March 2011 several of the online reports were upgraded to further enhance the service we provide to our customers.

The Gold and Platinum tenant check reports now include a new and enhanced risk score analysis based on an individual’s probability of meeting financial payment commitments. Additionally we have now included CAIS financial account verifications for both of these reports.  Finally, for our changes to tenant checking services, the Platinum report also now includes OFAC and HM Treasury sanctions list checks, these cover sanction checks including those involved in serious fraud and those suspected of supporting or funding terrorist activities.

The Employment screening financial background check has also been revised to include the new CAIS account verifications and both OFAC and HM Treasury sanctions list checks (previously this report only provided HM Treasury sanctions checks).

For those who have not yet used our services we also include a search for linked addresses in all online screening reports, this technique helps to ensure that any history of CCJs, bankruptcy or IVAs will be found. If you would like to know more about our background screening services please call Credit Check Services on 01992 719 234, or visit our main website at www.Credit-Check-Services.co.uk

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Tenant Credit Checks are not all the same

November 8th, 2010

Landlords and letting agents are increasingly carrying out credit checks on prospective tenants, however some caution is required.  It is essential that the correct type of tenant credit checks are carried out, it is not a case of just buying on price. 

Background credit checks need to be performed thoroughly, if a company only carries out the minimum level of searching then it is likely that adverse financial history will not be found even when it exists.  For example it is not a simple case of providing a person’s identity and searching databases to see the results, a more thorough search would include:

1 – Date of birth validation

2 – Address validation

3 – Linked address searches

Often it is found that an address provided is not valid in credit databases, this maybe because there are multiple versions of the same address, or maybe the postcode is incorrect, or maybe the registered address is Flat A and not Flat 1.  If the address is not correct then it is likely that any searches for adverse financial data will be ineffective.

Given a valid address it is also possible that adverse data may not be found, this is because the adverse data can take a period of time before it is directly associated with the tenant’s most recent address. Take for example a tenant who has been at their address for 6 months, it is highly likely that any court data such as a CCJ or bankruptcy may not yet point to the current address, this is where a linked address search becomes important.  A linked address search will look for other addresses and then check each of these for adverse financial data linked to the tenant.

The bottom line is that you really need to ensure that the company carrying out the searches understands what is involved and performs searches with accuracy.

At Credit Check Services we carry out the necessary Date of Birth validation, address validation, and linked address searches in all of our screening reports, please feel free to call if you would like to know more.

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6 steps to check you have the right tenant

October 18th, 2010

Finding the right tenant for a property is not easy, all too often novice landlords (and even some more established landlords) fail to carry out sufficient checks before letting their property.  Below are listed some guidelines to help.

1 – Assess tenant affordability.  We all have different motivations on spending our hard earned money but there are some simple ratios to guide what is affordable.  Typically a ratio of around one third of disposable income spent on rent is reasonable.  If the ratio increases to 50% or more of disposable income spent on rent then the risk of a tenant not being able to afford the rent increases significantly.  If there is doubt about affordability and the tenant meets all other suitability criteria then get a guarantor.

2 – Check tenant identity.  It is essential to verify the tenant’s identity.  This involves checking an original official identity document such as a passport (much preferred) or a photo driving licence, or other official document.  You need to know the person “stood in front of you” is the identity you are letting the property to.

3 – Check the tenant’s financial background.  You need to establish the tenant’s history, and this is where a company such as Credit Check Services is required.  A range of report options are available, you can read more here; tenant screening reports

4 – Other document checks. Obtain sight of further original documents from the tenant to help establish their suitability:

  • Copy of the most recent current account bank statement, ideally the last 3 months to see how they manage their finances.
  •  At least one copy of a utility bill, such as a mobile phone monthly bill or water, gas, or electricity bill.  Note the name and address as well as no arrears shown.
  • A copy of the most recent pay statement and / or benefits statement.

If none of these documents are able to be provided there would have to be a very compelling reason.

5 – Tenant references.  Clearly the more you have the better however as a minimum you should take the previous landlord or letting agent reference.  An employer’s reference is also helpful but if you have all of the above (including copies of pay statements) you are almost there regards screening.

6 – The feel good factor.  All too often this is the only type of “tenant check” carried out by a landlord.  Whilst intuition helps there are far too many clever fraudsters who will appear as the model tenant, so this can only ever be complimentary and in addition to the steps outlined above.

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Tenant Check – FAQs

August 18th, 2009

What information do you need to carry out a tenant check?

The minimum amount of information is the tenant’s first & last name, their date of birth, and their current address.  Additional information such as income & outgoings, previous address , employer details and current landlord details is optional for some reports. You will find the information required for each report listed on a form you can print off (the link is just above the Buy button for each report type).

 

Which report option should I go for?

The most popular report is the gold tenant check, however you may find other options more suitable, we have provided more information here >> which report option to purchase.

 

How is the tenant risk score determined?

Risk score calculation is complex.  It takes account of a wide range of factors such as the applicant’s age, their credit default history, the longevity of their credit history, where they have been living, and their traceability in credit referencing systems. 

 

What if my tenant has just arrived into the UK?

In this case the tenant will have very little UK history.  The longer the tenant has been in the UK the greater their credit history profile.  If the tenant has only been in the UK for a few weeks it will not add any value in obtaining a tenant check report.

 

Can you do a check against someone from the Republic of Ireland?

We cannot check the history of applicants whilst they have been living in another country.  Reliable credit referencing sources only cover England, Scotland, Wales and Northern Ireland.

 

Do I need the tenant’s date of birth?

This is very important for any check carried out.  Whilst we can run checks without a date of birth there is a probability we will not find adverse credit history (should the applicant have any).

 

Why isn’t the tenant shown on the electoral register?

Everyone has the right to withhold information from the public electoral register, when this happens we are unable to report the current occupant in the register.   Additionally, as tenants tend to live at an address for a short duration, or share with another occupant, they will sometimes choose not to register for the current address provided.

For details of tenant check options and to purchase reports go to http://www.credit-check-services.co.uk/services.asp

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Tenant Checks – which report option to choose?

August 18th, 2009

The most popular report option purchased is the gold tenant check, this level of report provides a good balance of information that is of benefit to both landlords and letting agents.  All of our tenant check reports can be used to provide checks against guarantors or tenants.

Below we have also summarised what is included within each of our tenant checks to help decide on the most suitable report option for a given situation.

The bronze tenant check

This report provides a summary of any CCJs, Court Decrees, Bankruptcy, or Insolvency against an applicant. Our searches will include a linked address search, this is very important if a tenant has only been at their current address for a short period (which is normal for tenants), you can read more here on the linked address search.

The report has been designed for landlords and letting agents who already have a comprehensive referencing system and only need to check for court orders against the applicant. Alternatively this report is used for a joint tenant who may not be the main income source with respect to a tenancy agreement.

The silver tenant check

This report meets the minimum requirements to satisfy rental guarantee insurance where a tenant is required to have no CCJs / Bankruptcy / Insolvency, at least one address verification, and not in the high risk score category.

The report provides a summary of any CCJs, Court Decrees, Bankruptcy, or Insolvency against an applicant.

A check against the public electoral register for the current occupant registered at an address.

Identification of any related addresses we find.

A tenant risk evaluation score along with a risk scale indicating the probability of default on rental payments.

It should be noted that tenants are sometimes not recorded in the public electoral register, either because they have opted out of having their records published, or because they did not register.  To help combat this we provide additional verifications with our gold tenant check.

The gold tenant check

This is our most popular as it provides a good base range of information suited to rental guarantee insurance and sufficient address verification checks for an applicant should they subsequently need to be pursued for non payment of rent.

The report provides a summary of any CCJs, Court Decrees, Bankruptcy, Sequestration, or Insolvency against an applicant.

A check against the public electoral register for the current occupant registered at an address.

Identification of any related addresses we find.

A tenant risk evaluation score along with a risk scale indicating the probability of default on rental payments.

An additional check against CAIS (UK’s largest database for sharing accounts data) to provide further verification of the current address and also to list the number of financial accounts linked to the applicant’s current address.

Another benefit of the CAIS check is the detail on accounts linking an applicant to an address. Whilst it is normal to have up to 10 financial accounts, a high level of account activity, e.g. over 20 accounts, indicates that the applicant may be under financial stress. Please note however that such checks cannot guarantee to return all financial accounts linking a tenant to an address, the data provided is used only as an ‘indicator’.

The platinum tenant check

This report is most suited to a landlord that is new to letting, or where extra checks need to be taken against an applicant to provide a higher level of assurance.

In addition to the gold tenant check this report provides

Checks against Insight and Electoral Register for both current and previous addresses provided by the applicant.

OFAC and HM Treasury sanctions list checks (covers serious fraud and those suspected of terrorist involvement of funding).  

Verification of employer name with telephone number provided.  We have found cases where applicants provide telephone numbers of friends to pass off as their employer.

Verbal referencing with the existing landlord or letting agent to provide feedback on whether there were any rental arrears or unsatisfactory behaviour.

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Tenant checks

August 18th, 2009

One of the first steps in checking a tenant is to verify their identity.  Whilst we can verify identities against financial accounts and other sources we cannot verify the photo identity.  The very first step should be that you check the tenant’s identity against a passport, or failing that a driving licence identity card.

From the identity provided by the tenant you will have their name and date of birth, verified by the person standing in front of you bearing a true likeness of the photo identity provided.  You now have most of the information needed to carry out an on-line check. 

The next most important piece of information is an address verification.  Ask the tenant to provide a document linking their name with the address they say they are living at.  This document could be an invoice for council tax, a bank statement, a utility bill, etc.  Do not accept a letter from another person or employer, these do not provide sufficient evidence.  If the tenant does not have any document for their current address then ask them for a document linking them to a previous address.

You are now ready to proceed with your on-line tenant check.

Depending on which report option you choose you may need other information ranging from income and expenditure through to employer details.  For each report option you will find a link where you can view and print off a form containing all of the information required.

When submitting the tenant information on-line it is important that you enter the correct spelling of their name, their date of birth, and the last verified address that you were provided.  With this information we can search court databases, financial databases, electoral register, and other databases depending on the report option selected.

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