Hi All. So I just got back a referencing report on a prospective tenant. Everything looks good, except that their equifax risk score has come up as 197, which only just places them into the ‘high risk’ category (1-199). Does anyone know how they calculate these risk scores, and why it might have come out this way? The tenant in question is a working professional, has no CCJ’s or anything like that, has been on time with rent payments, etc.
There really is no such thing as a “credit score”, it’s an invention of marketing.
It’s really a “credit history”. A low score may just mean they have never been in debt.
No debt => No history => Low score
Other reasons include that they are close to their credit limits, which often indicates they are approaching a debt-crunch.
A good score is good sign, a bad score really doesn’t tell you much I’m afraid.
Also bear in mind, Equifax/Experian are private companies, and are much more prone to making mistakes than their advertising would lead you to believe. I would inform the potential tenant, to give them a chance to fix their records. It may simply be that they have shared a house with someone else with a bad credit record, and are a victim of guilt-by-association.
I’d suggest asking more questions, specifically around how much debt they have.
EDIT:
Many people are scared that renting to someone with a bad credit score will damage the report for the building (or even their own score). You can avoid this by writing a letter to credit agencies with a Notice of Disassociation