In this Haletale article, we’ll explore how rent payments can impact your credit score and what you can do to make the most of this opportunity.
Boost Your Creditworthiness with On-Time Rent Payments
The Landlord Credit Bureau (LCB) based in Toronto aims to make rent history a factor in building credit. It wants to reward tenants who pay rent on time and penalize those who don’t.
However, it’s important to note that rental payments alone may not be enough to establish credit. A history of credit usage and payments is still crucial.
Furthermore, the CEO of the Landlord Credit Bureau (LCB), Zachary Killam, recently spoke about the importance of recognizing renters who pay their rent on time.
Killam stated that many renters with poor credit scores actually have a solid history of paying their rent, but have trouble securing property due to landlords relying on credit ratings.
Additionally, not all of a tenant’s credit scores may be affected by rent reporting, as different lenders access different credit ratings.
LCB has partnered with Equifax, a major credit bureau in Canada, to add rental payment history to credit reports. Landlords can now report tenant payments to LCB, which will appear on the renter’s credit report via Equifax. This service is now available in all provinces except Quebec.
Who Benefits from Rent Reporting?
The new rent reporting procedure will particularly help consumers with limited credit histories, including newcomers to Canada and those new to credit. LCB is an online network for landlords and property managers, providing incentives to ensure on-time rent payments. Landlords can add terms on their website explaining that Equifax will record tenant payments.
Renters who pay their rent on time will benefit from a positive impact on their credit scores, while those who are late in paying rent will face a negative impact.
Is Rent Reporting Effective?
The credit reporting process for rent history is not uniform and may vary depending on the lender. Therefore, not all of a tenant’s credit scores may be impacted by rent reporting.
The concept of building credit through rental payments isn’t new. In the US, several rental reporting firms accept rent payment reporting, such as Rental Karma, Rent Reporters, and Cozy. However, it’s not a foolproof solution. You can’t establish credit solely through rental payments; a history of using credit cards and other payment methods is still crucial.