The federal government is proposing to tie on-time rent payments to credit scores as a way to help renters break into the housing market. Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland announced these measures with the aim of amending the Canadian Mortgage Charter to make it fairer for renters. The idea is that renters should receive credit for the money they spend on rent, just as homeowners receive credit for paying their mortgage. This move is seen as a way to provide fairness to the approximately one-third of Canadians who rent their homes.
Equifax President and CEO Sue Hutchison supports the idea, pointing out that it doesn’t make sense that paying a mortgage can enhance your credit score while renting a home for the same amount does not contribute. This proposal could also provide more information on landlords, particularly smaller property owners who may not always be captured by credit agencies. Rent reporting is not a new concept, and companies like FrontLobby already make this information available to credit bureaus. Both TransUnion and Equifax are working on incorporating rental data into their credit profiles to help consumers build their credit.
Despite the potential benefits of the proposed measures, rental advocates and experts have raised concerns about the impact on those struggling under a housing crisis. Canadian Centre for Housing Rights director of policy Dale Whitmore is worried that tying rent payments to credit scores could harm renters, especially those who have difficulty paying their rent on time. With high rents in some cities, such as Toronto, it may be challenging for renters to save for a down payment on a home while paying exorbitant rent prices each month. There are calls for the government to consult with stakeholders, including renters themselves, to ensure that any new measures protect renters from negative consequences.
As full details of the proposal are expected to be included in the federal budget, there is a call for careful consideration and consultation with those most impacted. Whitmore emphasized the importance of working with provinces and territories to ensure that renters remain protected from any misuse of their credit information. A government official, speaking on background, stated that the aim of last week’s announcement is to support renters in building their credit scores and helping younger Canadians achieve homeownership. The government has no intention of implementing measures that would hinder Canadians from achieving their goal of homeownership. Ultimately, the success of these measures will depend on thoughtful planning and collaboration with all stakeholders involved.
