Rent payments in time could improve your credit score. Tenants’ advocates are concerned about the missed rent payment
Canadian credit bureaus Equifax and TransUnion say they are testing the inclusion of rent payments in credit score calculations after the federal government announced it wants renters to get credit for paying their landlords on time.
So far, Equifax says it’s been testing small volumes of rental payment data. In a study, the agency found that the inclusion of ‘alternative data,’ such as rent, could improve the credit scores of roughly five million more Canadians.
TransUnion also confirmed it is already assessing rental data for credit scores. The agency said it is open to working with the government in determining the best way to implement it.
But critics raise concerns that the new practice would instead harm those struggling to pay rent or facing landlord abuse as asking rents soar countrywide.
“We’re already seeing so much abuse without this in place,” said Chiara Padovani, co-chair of the York South-Weston Tenants’ Union.
“We’re already seeing landlords, by mistake or on purpose, overcharge tenants … So now we’re going to see that show up in people’s credit scores?”
Tenants on rent strikes to protest
The union represents a group of more than 100 tenants currently on rent strike due to alleged poor living conditions and a series of rent hikes higher than the provincial limit. Last Thursday, tenants rallied outside a condominium near Weston Road and Lawrence Avenue in support of a family being evicted from a two-bedroom apartment.
“The main problem tenants are facing right now is how unaffordable our rents are,” Padovani added. “And bringing in a measure that will further punish people for how unaffordable their rent is just seems like they (the government) are completely out of touch, completely off base here on this one.”
Equifax president and CEO Sue Hutchison, however, says the measure will help protect a growing group of renters being priced out of the housing market.
“It doesn’t make sense that if you pay $2,000 in your mortgage every month, that counts towards your credit score,” said Hutchison, “but if you pay $2,000 towards rent today, it doesn’t.
Rent data collected with consent of tenants
“We want to make sure we’re modernizing the credit infrastructure in this country.”
Hutchison said Equifax will collect payment data like any other, from landlords or in the case of social housing, the government, with consent of renters. It will also follow its current formal process for disputes in cases where renters disagree with the information provided, she said.
The agency will be able to share more details once the federal government completes its consultation with industry members, she added.
In a March statement, Minister of Finance Chrystia Freeland said “renters deserve credit for the money they put toward rent over the years.
“We’re helping them get credit for rental payments so they can qualify for a mortgage, or even a lower rate, sooner and unlock the door to their first home.”
The liberals also announced the launch of a $15 million tenant protection fund and a new Canadian Renters’ Bill of Rights, which would require landlords to disclose their history of apartment pricing, along with other measures.
‘Positive step’ toward helping Canadians build credit history
Dale Whitmore, director of policy and law reform at the Canadian Centre for Housing Rights, believes that while the new proposal is a “positive step” toward helping Canadians build their credit history, the government should be careful in its implementation.
“The government must ensure that renters who choose not to include rental payment histories in their credit scores are not penalized,” he said in a statement.
“This measure will only be successful if it is implemented in a way that avoids contributing to discrimination against the increasing numbers of people in Canada who are not always able to pay their rent on time.”
This article was first reported by The Star
