How Reporting Your Rent Payments Can Boost Your Credit Score

As a newcomer, you land in Canada with no credit score and no credit history. While there are developments in the works, for now – most lenders won’t accept your credit history from your home country. So, building your credit score in Canada is a priority for many newcomers. In this article, we dig into a platform newcomers can use to report rent payments to build credit history, which can improve your credit score. 

Key Takeaways

• Reporting your rent to the credit bureau, Equifax, impacts your payment history, credit history and credit mix on your credit report. 
• If you have a history of paying rent on time, reporting this history can help you improve your credit score. 
• Our trusted partner, Borrowell, can help you report past, current, and future rental payments to Equifax. 

How Does Rent Reporting Benefit Newcomers To Canada

Newcomers to Canada arrive with a credit score of zero. You will also have no credit history when you land in Canada (though there are exciting developments coming in this space), which makes it challenging for you to get access to credit products to build your credit score. 

Building Credit Is A Challenge, Rent Reporting Can Help

Then, there’s another challenge – many of your monthly payments won’t count towards your credit score. Rental payments, historically, haven’t been reported to credit bureaus so these payments don’t automatically help you boost your credit score. The same goes for utilities payments, like your electric or gas bill and your internet and cable payments. 

Canada’s Government has called on industry providers to innovate in this space: 

“Renters deserve credit for their on-time rent payments, which will make it easier to qualify for a mortgage, and even at a lower rate. That’s why the government is calling on banks, fintechs, and credit bureaus to prioritize launching tools to allow renters to opt-in to reporting their rent payment history to unlock pathways for more renters to become homeowners.” – Canada’s Federal Budget 2024

And the public agrees, with 87% of renters saying that their payments should count towards their credit score. 

Newcomers Dream Of Home Ownership, Rent Reporting Can Help

Newcomers to Canada are buying more homes, and many of you are also optimistic about your chances of owning a home in the near future. Rent reporting can give renters a fairer chance at accessing better financial products, including lower mortgage rates, as a result of having a better credit score. 

How Reporting Your Rent Payments Can Boost Your Credit Score

To understand how rent reporting can boost your credit score, you first need to understand how credit scores are calculated. We covered this in significant detail in another post but to summarize, these are the factors that count:

• Payment history – 35%
• Credit utilization – 30%
• Credit history – 15%
• Credit mix – 10 %
• Hard credit checks – 10%.

Assuming you pay your rent on time each month (and have a history of doing so), reporting your rent can improve your payment history, credit history and credit mix on your credit report. In other words, it impacts three out of five factors that contribute to your credit score. 

How Does Rent Reporting Work

To start reporting your rent, you’ll need to sign up for a service that offers rent reporting. Borrowell is one of the major players in this arena, because it doesn’t require landlord participation. There are other trusted providers, like FrontLobby, but some of these require your landlord to consent and actively participate in the reporting process. Some landlords are reluctant to do this because of the monthly time commitment. 

As for exactly how it works, the exact process varies depends on which platform you use to report your rent payments. But the outcome is that your rental payments are reported to Equifax and will be recorded on your credit report through Equifax. At the time of writing, we couldn’t find any providers that reported your rental payments to TransUnion (the other major credit bureau in Canada). 

If you choose Borrowell for your rent reporting, you have two options (and you can choose both or either): 

1. Report up to 24 months of payment history to Equifax. This involves showing proof of payment to Borrowell, which will then report these payments to Equifax. 
2. Report current and future rent payments to Equifax automatically by sharing your electronic banking records. 

Tips For Reporting Your Rental Payments To Boost Your Credit Score

Make Your Rent Payments On Time

Since payment history is the largest factor (35%) in determining your credit score, ensuring your rent is paid on time every month is critical. Late or missed payments can negatively impact your credit, and this includes rent if it is being reported. 

Quick tip: Set up automatic payments to avoid missing due dates and keep your credit score moving in the right direction.

When To Report Your Rent To Improve Your Credit

This depends on your unique situation, but there are a few considerations: 

1. Consider reporting your rental history if you have been paying rent for 12-24 months. Borrowell can help you report up to two years’ of rental payments. 
2. Start reporting your current and future rental payments once you have signed a rental agreement and have developed a habit of paying rent on time. 

Remember: reporting your rental payments if you pay your rent late can harm your credit score. So if you have a track record of late payments, spend time improving your payment habits before reporting your rental payments. 

Be Wary of Credit Score Scams

While rent reporting services can be a great way to build credit, not all services are legitimate. Be cautious of any service that promises an overnight boost to your credit score or requires excessive fees. Stick with reputable companies (like Borrowell) that have established partnerships with major credit bureaus.

Quick tip: Look for these telltale signs of credit score scams: 

• Promises of overnight or very fast results: Genuine credit improvement usually takes months, not days.
• Claims to remove accurate negative information: If a company says they can erase legitimate negative items from your credit report, it’s likely a scam.
• Requests for payment via gift cards: Scammers often ask you to buy gift cards and provide the serial number and PIN, a clear red flag.
• Lack of credible reviews or press coverage: Scammers often have little to no customer feedback or media recognition, making them harder to verify.

Regularly Check Your Credit Score

It’s important to regularly check your credit report to ensure your rent payments are being reported accurately. You can access your credit score for free through Borrowell and monitor it as your rental payments contribute to your overall score. If there are any errors or discrepancies, it’s essential to address them quickly with the reporting service or the credit bureau.

Continue Building Credit In Other Ways Too

Rent reporting can be a great tool to build credit, but it shouldn’t be the only strategy. Consider diversifying your credit by opening a secured credit card, paying off existing debts, or maintaining a low credit utilization rate. A strong credit score is built by balancing different types of credit, so make sure you’re building credit across the board.

In Summary

Rent reporting is a valuable tool for newcomers to Canada looking to establish credit and boost their credit score. By ensuring your rent payments are reported to major credit bureaus, you can improve your payment history, credit history, and credit mix—all crucial factors in your credit score. Working with trusted partners can help you get started and make the most of your rental payments, bringing you one step closer to achieving your financial goals in Canada.