Does Reporting Rent Payments Improve Credit Score?

We know all about the common ways you can increase your credit score. If you live in Ontario and consistently pay your rent, we’ve got a new way for you – rent reporting. Traditionally, your score improves every time you take debt and pay it on time. Credit cards, personal loans, and mortgages are just a few examples. 

With this new method, you don’t need to borrow any money, just pay your rent on time, and report it to the government. Let’s talk more about rent reporting and how it benefits you. We’ll keep it real, simple, and friendly.

Where do I report my rent to improve my credit score?

Tenants and landlords can sign up on third-party platforms like Landlord Credit Bureau (LCB) and RentCheck to report rent payments to credit bureaus. Regular reporting is seen as a sign of financial responsibility. 

Not all credit bureaus treat rent reporting equally. While Equifax Canada and Landlord Credit Bureau accept rent payment history, TransUnion won’t include it in their traditional credit score model. 

What happens when I miss a payment? 

Just like with credit card or loan payments, missing rent payments can hurt your score. If your landlord or the rent reporting service reports a missed payment, it will show up on your credit history as a delinquency.

If you’ve ever been late on rent due to any circumstances, like job loss or illness, communicate with your landlord as soon as possible to avoid it being reported. 

What are the pros and cons of reporting your rent payment? 

Pros of Reporting Rent Payments

1. Improve Your Credit Without Debt
   Paying rent doesn’t add to your debt, which means you can build credit without worrying about borrowing more money.  
2. Long-Term Impact
   If you’ve been renting for years and consistently pay on time, this record can build a long-term, positive payment history. Your credit score values older accounts that show consistency. 
3. Alternative for Those With Low Credit
   If your credit is less than perfect due to a history of missed payments or high credit utilization, rent reporting can become your main way to increase your score. Rent is likely one of the largest payments you make, so getting credit for it makes sense.

Condos of Rent Reporting

1. Not All Bureaus Count Rent Payments
   As we mentioned earlier, while Equifax accepts rent payment data, TransUnion does not include it in their traditional credit score models in Ontario.  
2. Potential Fees
   Some rent reporting services charge fees to either the landlord or tenant. If you’re considering using one of these services, check for any hidden costs before you sign up. 
3. Risk of Negative Reporting
   Since rent payments are typically higher than monthly credit card bills, even a single missed rent payment can cause a big drop in your credit score.

As a tenant, you can use this new program to review past landlords and look up information on future landlords, which streamlines the rental process and helps you find good long-term rentals. 

This is a great tool if you’re a newcomer to Canada and don’t want to apply for unsecured credit cards. It is also recommended for college students who live away from family and want to build their credit score the right way.