Equifax Canada is exploring how rent data could be factored into consumer credit score calculations to make financial services and borrowing accessible to more people.
The agency says it tested small volumes of rent payment data to assess their relevance to credit scores.
The inclusion of “non-traditional data” could help establish or improve the credit scores of millions of Canadians, according to an Equifax study.
“Equifax Canada has led the way and modeled how rent payments, like mortgage payments, can help build a credit score,” says Sue Hutchison, president and CEO of Equifax Canada, in a statement.
“This is really important for young Canadians, newcomers to Canada and other underserved consumers. »
Ottawa request
The federal government announced last month that it wants rent payment history to be factored into credit scores.
“Renters matter, and young Canadians are spending a lot of their hard-earned money on rent. We think it should count a lot more” in the credit rating, declared Prime Minister Justin Trudeau on March 27, announcing several initiatives to help tenants.
In its budget last week, Ottawa asked financial institutions, financial technology companies and credit bureaus to prioritize the launch of tools allowing tenants to report their rent payment history.
The government believes this measure could help more renters become homeowners, as a history of paying rent on time could strengthen credit scores and make it easier to get a mortgage or lower interest rate .
Equifax also believes that including rent payments in credit scores would help make traditional credit and financial services more accessible to renters, who “represent a growing sector of the Canadian economy,” said P. -CEO of Equifax.
Ottawa’s announcement was welcomed by some companies, including Equifax Canada, but tenant advocacy groups said the measure could be a double-edged sword.
Elizabeth Mulholland, executive director of Prosperity Canada, recalls that many people are struggling with higher rents and are not always able to pay on time.
So it’s important, she says, that people can decide whether or not they want to share their rent data with credit bureaus.
“If we just mainstream it for everyone, it could be a problem for many low-income and vulnerable people,” she said.