What is rent reporting and why do we need it now?

Nov 16, 2022

Let’s talk about credit scores for a second. You hear about them all the time and you’re pretty sure they matter (they do). Despite all that, they’re still a little… obscure?

I mean ok, I know they’re important if I’m looking for a mortgage or car loan but what else? What’s a good score? How can I even affect my credit score? And —more importantly — what’s the best way to increase my credit score? I do want to increase it, right (I do)?

What even is a credit score?

Your credit score — if I had to explain it in one sentence — is the most trusted signal of your creditworthiness. In plain English, it’s the main thing lenders look at when deciding whether to give you a loan or not.

To further crystallize things, a good credit score can be the difference between being approved for a mortgage and having to rent a little longer.

How is my credit score calculated?

In Canada, your credit score is determined by two credit bureaus (Equifax & Transunion). These institutions don’t just make up your credit score (despite what it might feel like at times). They compile troves of financial data which they receive from your bank and creditors to generate a risk image of you.

While the exact formula for calculating your credit score isn’t exactly public information, here are some of the things that correlate with a higher credit score:

  1. Low average credit utilization (essentially your credit card balance over your credit limit)

  2. Paying your bills on time

  3. Fewer credit checks and applications

  4. A greater variety of credit products (credit card, car loan, line of credit, etc)

  5. Longer length of credit history (let’s focus on this one in a sec)

Credit scores range between 300–900 in Canada. Typically, a score of 700 and above is considered good.

What if I’m new to Canada or just turned 18?

In either of these cases, you’re essentially starting out with no credit score. Keep in mind that this isn’t the same thing as having “bad credit”. It simply means that the credit bureaus haven’t nailed down an accurate score for you yet.

That said, you will still need to start building credit if you have aspirations of accessing most credit products… and even finding a rental unit. While paying your cellphone bills and groceries with a credit card (and paying the balance off on time) will help you build credit, the process is slow and hampered by what is almost certainly going to be a low limit on your credit card.

If only there was a way to leverage some of the larger expenses you DON’T use your beginner credit card on…. like rent.

What is rent reporting and how might it help?

Rent reporting is in its infancy in Canada but promises the possibility for renters to build credit on their on-time rent payments. Now, this has some really interesting implications for those of us who are just getting started in the country given that rent tends to be (for most of us) our largest monthly expense. Providing this additional datapoint to credit bureaus should in theory allow renters to build credit faster.

The implications include getting into a better rental and — arguably more important for many of us — owning a home sooner.

Granted rent is typically the last thing to go when most of us are in a financial pinch, the opportunity to build credit on timely rent payments should be welcomed!

Especially in the midst of economic headwinds, being able to rely on the backbone of your budget (rent) to continue to build credit, the arrival of rent reporting could not come at a better time.

So… how do I report my rent?

Chexy will allow you to opt into rent reporting and ultimately report your on-time rent payments to the major Canadian credit bureaus. By paying your rent with Chexy, you begin to generate the rent history credit bureaus need in order to include your rent payments on your credit report… rent history that typically lives and dies between you and your landlord.

Reporting on-time rent payments to credit bureaus can help build credit history, make your next rental application more competitive, and ultimately help you qualify for a mortgage and other credit products sooner.

Let’s talk about credit scores for a second. You hear about them all the time and you’re pretty sure they matter (they do). Despite all that, they’re still a little… obscure?

I mean ok, I know they’re important if I’m looking for a mortgage or car loan but what else? What’s a good score? How can I even affect my credit score? And —more importantly — what’s the best way to increase my credit score? I do want to increase it, right (I do)?

What even is a credit score?

Your credit score — if I had to explain it in one sentence — is the most trusted signal of your creditworthiness. In plain English, it’s the main thing lenders look at when deciding whether to give you a loan or not.

To further crystallize things, a good credit score can be the difference between being approved for a mortgage and having to rent a little longer.

How is my credit score calculated?

In Canada, your credit score is determined by two credit bureaus (Equifax & Transunion). These institutions don’t just make up your credit score (despite what it might feel like at times). They compile troves of financial data which they receive from your bank and creditors to generate a risk image of you.

While the exact formula for calculating your credit score isn’t exactly public information, here are some of the things that correlate with a higher credit score:

  1. Low average credit utilization (essentially your credit card balance over your credit limit)

  2. Paying your bills on time

  3. Fewer credit checks and applications

  4. A greater variety of credit products (credit card, car loan, line of credit, etc)

  5. Longer length of credit history (let’s focus on this one in a sec)

Credit scores range between 300–900 in Canada. Typically, a score of 700 and above is considered good.

What if I’m new to Canada or just turned 18?

In either of these cases, you’re essentially starting out with no credit score. Keep in mind that this isn’t the same thing as having “bad credit”. It simply means that the credit bureaus haven’t nailed down an accurate score for you yet.

That said, you will still need to start building credit if you have aspirations of accessing most credit products… and even finding a rental unit. While paying your cellphone bills and groceries with a credit card (and paying the balance off on time) will help you build credit, the process is slow and hampered by what is almost certainly going to be a low limit on your credit card.

If only there was a way to leverage some of the larger expenses you DON’T use your beginner credit card on…. like rent.

What is rent reporting and how might it help?

Rent reporting is in its infancy in Canada but promises the possibility for renters to build credit on their on-time rent payments. Now, this has some really interesting implications for those of us who are just getting started in the country given that rent tends to be (for most of us) our largest monthly expense. Providing this additional datapoint to credit bureaus should in theory allow renters to build credit faster.

The implications include getting into a better rental and — arguably more important for many of us — owning a home sooner.

Granted rent is typically the last thing to go when most of us are in a financial pinch, the opportunity to build credit on timely rent payments should be welcomed!

Especially in the midst of economic headwinds, being able to rely on the backbone of your budget (rent) to continue to build credit, the arrival of rent reporting could not come at a better time.

So… how do I report my rent?

Chexy will allow you to opt into rent reporting and ultimately report your on-time rent payments to the major Canadian credit bureaus. By paying your rent with Chexy, you begin to generate the rent history credit bureaus need in order to include your rent payments on your credit report… rent history that typically lives and dies between you and your landlord.

Reporting on-time rent payments to credit bureaus can help build credit history, make your next rental application more competitive, and ultimately help you qualify for a mortgage and other credit products sooner.