Will counting rent for credit score help if home prices stay high? What we know
Global News
Prime Minister Justin Trudeau announced last week the measures would aim to amend the Canadian Mortgage Charter in an effort to make it more fair for renters.
As the federal government proposes tying on-time rent payments to credit scores as part of efforts aimed at helping renters break into the housing market, some advocates are cautioning that with high home prices and climbing rent, the measures are only one piece of the puzzle.
Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland announced last week the measures would aim to amend the Canadian Mortgage Charter in an effort to make it more fair for renters.
“Renters deserve credit for the money they spend on rent today and that they have spent on rent over the years,” Freeland said on March 27.
A credit score comes from information in a person’s credit report and shows how well people can manage their credit and whether it would be risky for a lender to loan you money, according to the Government of Canada.
Equifax President and CEO Sue Hutchison said it doesn’t make sense that paying a monthly mortgage of $2,500 can enhance your score, yet renting a home for the same amount does not contribute.
“It’s a little bit illogical that it’s not included, because it’s certainly a major part of shelter expenses in this country,” she told Global News.
The 2021 Census found there are five million renter households — translating to roughly one-third of Canadians renting a home — which is why Hutchison said such a measure could be considered “fairness” for residents.
Tom Davidoff, associate professor at the University of British Columbia’s Sauder School of Business, added reporting of rent could provide more information on who is a landlord, such as “mom and pop” landlords who may not always be as known to credit bureaus compared to large corporations.
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