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Disputes over unpaid rent account for one in five lettings cases. For property owners, this highlights one simple truth: choosing the wrong tenant can cost thousands. That’s why running a tenant credit check before handing over the keys isn’t just good practice, it’s essential. In this article, we explain how tenant credit checks work, when permission is needed, what to do if a tenant fails, and how we can support landlords with business checks and buy-to-let finance.
Why should landlords credit check tenants?
Renting out property is essentially entering into a financial agreement. Just like banks assess borrowers before approving loans, landlords should check tenants before approving a tenancy.
A credit check for tenants can help you gain peace of mind that rent payments are likely to be made on time by:
Tenant credit checks for businesses
Not all tenancies are with private individuals. In some cases, you might be letting to a limited company, for example, when renting out office space, a retail unit, or arranging a corporate let. In these situations, the process is slightly different. Instead of looking at someone’s personal credit history, you’ll want to assess the financial health of the business itself. This means checking whether the company pays its bills on time, how much debt it carries, and whether it’s financially stable enough to keep up with rent payments. This is where Capitalise can help. Our platform gives landlords and business owners the tools to:
By running a credit check on a company, you gain a clearer view of whether they’re a reliable, low risk tenant, giving you confidence before entering into a long term agreement.
Do you need permission to credit check a company tenant?
When renting to a business, the information you’ll review in their company credit score is based on publicly available data, like accounts filed at Companies House and County Court Judgments (CCJs). Because this information is already in the public record, you don’t usually need the company’s permission to run the check. Still, it’s good practice to let the business know you’ll be carrying out a credit check, so the process is transparent and professional.
How to do a credit check on an individual tenant
If you’re renting to an individual, you’ll need to check their personal credit report. Landlords cannot directly access someone’s credit file themselves, but there are a few ways to do this:
1. Tenant referencing agencies
These agencies run checks on your behalf, including:
Popular services in the UK tenant credit check market include:
2. Asking the tenant directly
Tenants can legally request a copy of their own credit report for free from the main UK credit reference agencies (Experian, Equifax, TransUnion). You can ask them to share this with you.
3. Full referencing packages
Some landlords prefer comprehensive referencing services offered by letting agents, which include credit checks alongside affordability assessments.
Do I need permission to run a tenant credit check?
If you want to check someone’s personal credit profile, you must have the tenant’s explicit consent before carrying out a credit check. This is because credit checks involve handling personal data, which is protected under the UK GDPR and the Data Protection Act 2018. Running a check without informing the tenant would be unlawful. In practice, most tenant referencing services and letting agents build this into their process. They include a consent form or a tick-box declaration that applicants must complete before a check is run. This ensures the tenant is fully aware of what information will be accessed and why. A tenant credit check is usually a soft search of their credit file, meaning it does not affect their credit score, but it still requires permission.
Can landlords ask tenants to pay for credit checks?
No. In the UK, landlords and letting agents cannot ask tenants to pay for credit checks. Under the Tenant Fees Act 2019 (which applies in England, Scotland and Wales), it is illegal to charge tenants for referencing, credit checks, or any other admin fees related to setting up a tenancy. These costs must always be covered by the landlord. In Northern Ireland, while the same legislation does not apply, the practice of charging tenants for credit checks is widely discouraged and may be considered unfair.
What if a tenant fails a credit check?
A poor credit history does not always mean you have to reject a tenant outright. Instead, you can consider alternative arrangements to reduce your risk. For example, you could request a guarantor, someone with a stronger financial background who agrees to cover the rent if the tenant cannot. Another option is to arrange a shorter initial tenancy to test the tenant’s reliability before committing to a longer contract.
It is important to balance the potential risks against the possible rewards when making your final decision.
Beyond credit checks, accessing finance for buy-to-lets
Checking tenants is only one part of protecting your rental income. The other is making sure you have the right finance in place to fund, grow, or refinance your property investments. At Capitalise, we don’t just help landlords with business credit checks. We also work with a panel of 130+ lenders, giving you access to a wide range of funding options, including:
By choosing reliable tenants and securing the right funding, you can reduce risk, protect your rental income, and build a stronger property portfolio.
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