Why Tenant Loans Can Be Hard To Obtain

            Tenant Loans are basically unsecured loans for people that do not own their own home. It is generally held that tenants are more likely to suffer from a poor credit history than someone who owns their own home. True, when running a credit score on a loan applicant, tenants will always fall short on the score. However, this may not necessarily be due to having a bad credit record, with a history of missed loan or credit card repayments or defaults. The very fact that they do not own their own home means that they probably do not have a stable residential history, particularly in the eyes of the lender.




            This is caused by virtue of the fact that tenants are quite often forced to keep moving and do not often stay at the same address for very long. There are not many tenants that stay in one place long enough, (usually 3 years, but more recently 4) to negate having to put down a previous address on any credit application. Many tenants have to move on after a couple of years through no fault of their own either when the tenancy expires or the landlord decides he wants to live in the residence again.

            Because of the relative ease of relocation, tenants tend to have a higher number of previous employers, which is another contributory factor in reducing the credit score for a loan application. It is an unfortunate paradox that, apart from a clean credit history, stable employment and residential history are two of the most important factors that a lender looks for when granting a loan. Not having a stable employment and or residential history will unfortunately detract from an applicants credit score, and impact on their ability to arrange a loan.

            Another bemusing factor that can affect a credit score of a tenant is the fact that the applicants credit history may be so clean it is actually devoid of any credit history at all. This occurs when the applicant has no history of obtaining credit or finance of any kind previously. The lenders prefer to see a history of regular repayments to previous loans or credit cards. Although the credit history shows no bad history, unbelievably there are some lenders who will refuse the loan application because of this.

            If this applies to the reader of this article, it is often good practice to get a credit card to use for a while, setting up a direct debit to make the repayments so that they do not get missed, and using it to buy regular items such as groceries, fuel etc that you would usually purchase each month anyway. It makes sense to apply for a card that rewards you for regular use. This will leave a repayment profile on your credit file and will overcome the problem of having no credit history.

            There are lenders available who specialise in lending to non-homeowners, but one fact remains in that due to the unstable profile of the tenant in the lenders eyes, the interest rate of the loan is generally going to be higher. High street banks have become less and less willing to lend now to non-homeowners, particularly following the events of the last couple of years and their newfound reluctance to lend to pretty much anyone. In fact, things have almost reverted to how they were 30 years or so ago when if you want a loan from a bank, you had to be an existing customer.

            Therefore if you have had problems arranging a loan as a tenant previousy, you may now understand why. Applying to a specialist tenant loans broker that has access to all the current lenders may be of benefit. One simple application will enable you to find out whether or not you will be able to get a loan.

About the Author
Steve Smith writes for Tenant Loans Arranged an online broker specialising in arranging loans for tenants, with a comprehensive panel of lenders to call on. Visit today http://www.tenantloansarranged.co.uk/information/