Federal plan would count rent toward a credit score. Who will it help — and who could it hurt?
CBC
A federal proposal to include rental payments in calculating credit scores might help some Canadians move into home ownership, but it could have consequences on renters who are already struggling with rising costs.
One measure of the proposed Canadian Renters' Bill of Rights, announced last week by Prime Minister Justin Trudeau, would use timely rental payments to calculate a person's credit rating. This, it said, would help level the playing field for young renters, particularly those who want to eventually buy a home.
"Renters deserve credit for the money they put toward rent over the years, especially when it comes time to apply for a mortgage for their first home," the announcement said.
Trudeau said there was something fundamentally unfair about paying $2,000 a month in rent while those paying the same for a mortgage get equity and can build their credit score.
An amendment to the Canadian Mortgage Charter would urge landlords, banks, credit bureaus and fintech companies to include rental reporting in a credit score.
Reaction to the federal proposal — which would require the co-operation of provinces — was mixed.
Those in favour agree it would help aspiring homeowners build the financial credibility needed to qualify for a mortgage or help them secure a lower borrowing rate.
Critics, however, said the measure doesn't address the key issues of insufficient housing supply and affordability, but it could hurt the credit scores of people who are struggling to pay their rent on time.
"Frankly, for the last decade or so, there's become a great divide in this country between homeowners and renters, and a lot of renters have felt left behind," said Scott Terrio, manager of consumer insolvency at Hoyes, Michalos & Associates Inc.
The proposed measure is an important step for renters whose monthly housing payments are likely their biggest expense, he said. A strong record of punctual rent payments would lend credibility to those who want to jump into the housing market.
If "all of a sudden you've got 12, 24 [or] 36 months behind you in making rent payments, it's going to make a big difference to your credit score and to your ability to borrow down the road," said Terrio.
Higher credit scores may be moot given a housing market in which demand far outweighs supply. The cost of rental units also continues to soar, with vacancy rates reaching a new low of 1.5 per cent in 2023 — the lowest rate on record since the CMHC began tracking that data in 1988. The demand is in part fuelled by Canada's growing population rate.
"This is not going to fix the supply issue," Terrio said, noting that it might compel even more people to enter the housing market, "but it's going to make things more fair between renters and homeowners."
While the measure would be "tremendously helpful" for renters on the cusp of qualifying for a mortgage, the current reality is that many young Canadians believe home ownership is out of reach, said Nemoy Lewis, an assistant professor in the School of Urban and Regional Planning at Toronto Metropolitan University.
Moubarak Bokhit Ali's memories of his home country of Sudan are punctuated by flashes of violence.
The man behind the Moose Jaw health centre that has claimed “a 100 per cent success rate in stopping the progression and in restoring function of people with ALS” says a recent CBC story about his company is evidence that he is seen as “a direct threat to the ALS drug industry.”
The Neighbour to Neighbour Centre’s trans and non-binary grocery program, which offers free food and household products to community members once a month, began with a simple question: how do we get free menstrual products to trans people without being awkward?
Bill Van Vugt is living a life that's unlike most other people his age, and one which has seen him turn a longtime hobby into championship gold.
The provincial government is taking steps toward improving Alberta's lucrative sand and gravel industry.
As medical labs across Ontario remain understaffed, one medical association is calling on the province to expand labs’ capacity for student placements by funding positions to train them.
The year wrapping up means it's getting closer to tax season, and the federal Community Volunteer Income Tax Program will once again be offering free filing services for Islanders with modest incomes.
It's not so easy to remove a politician from office between elections in Canada.
Natasha Martin-Mitchell says creating art gives her a sense of calmness that acts as a medicine during stressful times.
Gabriel Vilardi scored twice and star goaltender Connor Hellebuyck made 24 saves in his first game back from injury to power the Jets to a 5-1 victory over the Washington Capitals on Saturday that snapped Winnipeg's three-game losing skid.
Alberta’s auditor general Doug Wylie says his office's budget will be $1.5 million short next fiscal year.
British Columbia has filed a civil claim against e-cigarette giant Juul Labs, alleging the company developed highly addictive nicotine products and fuelled youth nicotine addiction with “deceptive marketing practices.”
There's been positive reaction in Ottawa to news that the nation's capital could be home to Canada’s first high-speed rail line by the end of the decade.