Equifax Canada testing use of rental payment data for credit scores
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Hey there, time traveller!
This article was published 23/04/2024 (852 days ago), so information in it may no longer be current.
TORONTO – Equifax Canada is exploring how rent data could factor in to credit scores to help make credit and financial services accessible to more people.
The agency said it has been testing small volumes of rental payment data to assess its suitability.
An Equifax study found that including “alternative data” could establish or enhance the credit scores for millions of Canadians.
“Equifax Canada has been leading the way and has been modelling how rental payments, just like mortgage payments, can help build a credit score,” Equifax Canada president and CEO Sue Hutchison said in a news release.
“This is so important for young Canadian consumers, new Canadians and other underserved consumers.”
The federal government announced last month it wants to see rental payment history count toward credit scores.
“Renters matter, and young Canadians put a lot of their hard earned money toward rent. We think that should count for a lot more,” Prime Minister Justin Trudeau said when he announced several initiatives to help renters on March 27.
In its budget last week, Ottawa called on banks, fintechs and credit bureaus to prioritize launching tools that would allow renters to opt in to reporting their rent payment history.
This could help more renters become homeowners, the government said, as a history of on-time rental payments could strengthen credit scores and make it easier to qualify for a mortgage or a lower interest rate.
Equifax said including rental payments in credit scores will help make credit and mainstream financial services more accessible.
“Renters are a growing part of the Canadian economy and it’s time they are recognized for making their rent payments on time,” Hutchison said.
Ottawa’s announcement was welcomed by some companies, including Equifax Canada, while advocates for renters said it could be a double-edged sword.
Elizabeth Mulholland, chief executive of charity Prosper Canada, said many people are struggling with higher rental costs and may not always be able to pay their rent on time.
Because of that, it’s important people have control over whether they want to share rental data with credit bureaus, Mulholland said.
“If you just blanket build it in, that could be problematic for a lot of low income people and vulnerable people,” she said.
— With files from Ian Bickis
This report by The Canadian Press was first published April 23, 2024.
