Your monthly rent is likely your largest expense if you’re a tenant. But historically, being punctual with paying your landlord hasn’t done anything positive for your credit score. Paying a $1,500 rent fee each month won’t improve your credit standing — but making a measly $50 payment on your credit card will. That’s quite an imbalance, considering one-third of Canadians are renters.
However, things are starting to change. Credit bureaus like Equifax are beginning to recognize rent payments as part of an individual’s credit history. And the private sector is introducing various innovative services to make rent reporting in Canada a reality.
In this article, we’ll show how paying rent can build up or improve your credit score and how you can get started today.
What is rent reporting in Canada – and why is it on the rise?
Rent reporting is a way to build up or enhance your credit score by having your rent payments recorded in your credit history. The credit bureaus account for these payments when determining your credit score, which will help to increase it over time.
As mentioned, rent payments have traditionally been overlooked in Canada as a sign of financial stability by lenders and credit bureaus. However, they are now getting more attention thanks to organizations like the Landlord Credit Bureau (LCB), a credit reporting agency focusing on the rental industry. In 2020, the organization teamed up with Equifax, one of Canada’s two main credit bureaus, to enable landlords to report tenants’ rent payments.
Here’s how the process works in a nutshell: The LCB collects rent payment details from your landlord and sends them to Equifax, which records them as part of your credit history (that means they will appear on your credit report). Equifax then accounts for these payments when calculating your credit score. Assuming you pay rent on time, your payments will reflect positively on your score.
The federal government has been shining a spotlight on rent payments recently, too. A March 27, 2024, statement from the Prime Minister outlined a number of measures aimed at helping renters improve their financial standing, including the ability to purchase a home. Among them was ensuring renters get credit for paying rent on time.
It’s easy to see why rent reporting is gaining momentum: There’s a glaring imbalance in how homeowners and renters are treated regarding debt payments.
A homeowner is able to achieve or maintain a positive credit score when they make mortgage payments. As a result, they gain access to more loan options at competitive interest rates.
However, a renter who diligently pays their landlord on the 1st of the month doesn’t enjoy this privilege —the rent payments count for nothing. As a result, they face more hurdles in improving their credit, which limits their borrowing options.
How to report your rent payments in Canada
There are three key points to understand about rent reporting in Canada:
- Rent payments can be reported only through a third-party platform. Some platforms allow you to report your rent payments on your own while others require collaboration with your landlord. However, neither you nor your landlord can send the payment details to a credit bureau directly.
- Rent payments cannot be reported to the Landlord Credit Bureau (LCB) directly. The LCB collects rent payment information from FrontLobby, a company they’ve partnered with to facilitate the rent reporting process. You or your landlord must sign up with FrontLobby to report rent payment information to the LCB.
- Only Equifax collects and records rent payments. Currently, Equifax is the only credit bureau in Canada that includes rent payments in credit reports and accounts for them when calculating credit scores. It receives rent payment data from the Landlord Credit Bureau (LCB) and other third-party platforms. As a result, you won’t find your rent payment history on a TransUnion credit report.
Several companies offer programs you can use to report rent payments. Here are a few to consider:
FrontLobby
FrontLobby is a platform that provides various tools and services for landlords, property managers, and renters, including rent reporting. Using the platform, you can sign up for an account that allows you to report rent payments to the LCB, which forwards them to Equifax. Both you and your landlord must participate in this arrangement.
To access this service, you must pay a $4 monthly fee. However, your landlord can report your rent payments on your behalf if they have their own paid FrontLobby account.
Borrowell
Borrowell is a financial technology company that offers various credit and financial management services. One of these is the Rent Advantage program, which lets you send your rent payments directly to Equifax. Once you sign up for an account, you must link your bank or credit card details to Borrowell’s platform and supply your lease information. There’s no requirement to involve your landlord in the process.
The service is available for a $8 monthly fee. You can also pay a one-time $59 fee to report up to 24 months of your rental history.
Zenbase
Zenbase is notable for offering Canada’s first rent reporting and rent splitting payment service. You can customize your rent payment schedule to suit your budget and cash flow. The company allows you to pay half of your rent at the beginning of the month while it pays the total amount to your landlord. Then, you pay Zenbase the balance on your preferred dates.
As a bonus, Zenbase reports all of your payments directly to Equifax. The cost to use the rent reporting service is $2.90 per month. You must also pay a basic membership, which will cost you $9.90 monthly. However, Zenbase waives this fee if you pay your rent in full at the beginning of each month. Additionally, you can report up to 24 months of your past rental history for a one-time fee of $19.90.
City Lending Centers (CLC)
City Lending Centers (CLC) is a rent reporting platform for tenants who want to build their credit by making timely rent payments. CLC verifies each payment and forwards the details to Equifax. The company also offers credit monitoring services, secured credit cards, and credit-building loans.
Your landlord must be involved in the rent reporting process, as they need to confirm each payment was received. The cost is $5 per month or $60 if you pay for one year upfront, plus a one-time $20 set-up fee. In addition, there’s an option to report your past 24 months of rent payments for a one-time charge of $120.
What are the benefits of reporting rent to credit bureaus?
Reporting your rent to credit bureaus can help you significantly strengthen your credit profile. By consistently paying rent on time, your credit score will gradually increase. The main reason for this positive outcome is that your payment history accounts for 35% of your overall score. Therefore, consistently paying on time is the fastest way to improve it. Adding rent payments to your credit profile will also enhance your credit mix, which lenders view favourably.
Thanks to a higher credit score, you’ll appear more attractive to lenders, which can help you snag lower interest rates and flexible loan terms. You’ll be more likely to obtain a credit card, mortgage, line of credit, car loan and other credit products.
Furthermore, with good credit, you’re more likely to get approved as a tenant. The reason is that landlords often pull credit reports when assessing potential tenants. Like lenders, they want to ensure you’re capable of keeping up with your payments, in this case, the monthly rent.
What are the drawbacks of reporting rent to credit bureaus?
While beneficial, there are some pitfalls with reporting rent to credit bureaus. The first is that it can harm your credit score. If you miss a payment or pay late, your score declines, just like if you fail to pay your credit card, mortgage, or car loan on time. If it dips low enough, qualifying for a loan at a reasonable interest won’t be possible. A slew of missed rent payments on your credit report can be enough to deter lenders from lending you money.
Another pitfall of rent reporting is that it’s not free—you have to pay a private company to send your payment information to Equifax. This isn’t the case with everyday loans like credit cards and lines of credit, where reporting is done automatically at no cost to you.
Can a landlord report your rent payments without your consent?
No. A landlord must obtain your consent in Canada before reporting your rent payments to a credit bureau. Typically, this is done by including a clause in the lease agreement. By signing the lease, you agree to have your rent payments, whether on-time or late, reported.
The bottom line on reporting rent payments to build up your credit score
For many Canadians, rent is a hefty ongoing expense. But historically, it’s been dismissed as an indicator of financial responsibility. However, this is slowly starting to change with calls from the federal government to level the playing field for renters and credit bureaus like Equifax incorporating rent payments into their credit scoring models.
Thanks to the rise of rent reporting services, you can benefit from this trend as a tenant. By reporting positive rent payments, you’ll enhance your credit standing, giving you access to a broader array of loan products at affordable interest rates. You may eventually qualify for a mortgage if that’s your goal. Just remember to always pay on time; otherwise, your credit score will decline, hurting your ability to obtain affordable loans.
If you’re currently struggling with rent payments, the good news is that there are plenty of other ways to revamp your credit score. You can even bounce back from an R9 rating on your credit report, the lowest one you can get hit within Canada. Check out our blog for more tips on improving your credit and managing your debts.
