The federal government is proposing tying on-time rent payments to credit scores in an effort to help renters break into the housing market. Prime Minister Justin Trudeau and Finance Minister Chrystia Freeland announced the measures aimed at amending the Canadian Mortgage Charter to make it fairer for renters. The idea is that renters should receive credit for the money they spend on rent, just as homeowners receive credit for their mortgage payments. This move comes as a response to the fact that renting is a significant expense for many Canadians, with one-third of Canadians renting their homes.
Equifax President and CEO Sue Hutchison pointed out the logic behind including rent payments in credit scores, noting that paying a monthly mortgage can enhance a credit score, while renting a home for a similar amount does not currently contribute to one’s score. The reporting of rent payments could also provide more information on landlords, particularly smaller landlords who may not always be known to credit bureaus. Companies like FrontLobby already offer rent reporting services, and credit bureaus like TransUnion and Equifax are working on incorporating rental data into credit profiles.
While the proposed measures are being praised for potentially helping renters build their credit profiles and potentially break into homeownership, some rental advocates and experts have expressed concerns. Canadian Centre for Housing Rights director of policy Dale Whitmore is worried that tying rent payments to credit scores could hurt renters who are already struggling to pay their rent. There are also concerns about the high cost of rent in certain areas, making it difficult for some Canadians to save for a down payment on a home. Toronto Metropolitan University professor Nemoy Lewis highlighted the challenges faced by renters paying high monthly rents.
With full details of the proposed measures expected to come from the federal budget, there are calls for the government to consult with stakeholders, including provinces and territories, to ensure that renters remain protected. It is important for the government to consider the impact of such measures on renters and to address any concerns that may arise. The government’s goal is to support renters in building their credit scores and ultimately helping younger Canadians achieve a “good middle class life,” including homeownership. Government officials have emphasized that they do not want to implement measures that would hinder Canadians from achieving their homeownership goals. Overall, there is a need for thoughtful consideration and consultation with those most impacted by the proposed measures.
In conclusion, the federal government’s proposal to tie on-time rent payments to credit scores is seen as a step towards helping renters enter the housing market. By recognizing rent payments as a significant expense for many Canadians, the government aims to provide renters with the credit they deserve for their financial responsibilities. While there are concerns about the potential negative impacts on renters struggling to pay their rent, there is also hope that these measures could assist those on the verge of homeownership. It is crucial for the government to consult with stakeholders and address any concerns to ensure that these measures are implemented in a fair and effective manner. Ultimately, the goal is to support renters in building their credit profiles and working towards achieving their homeownership goals.
