Equifax Canada tests ‘small-scale volumes’ of rental data for credit scores

Study shows potential credit score benefits for renters

Equifax Canada tests ‘small-scale volumes’ of rental data for credit scores

Equifax Canada is testing the inclusion of rental payment histories into credit scores as a way to expand access to credit and financial services for more Canadians.

The credit reporting agency revealed it has conducted initial testing with small sets of rental data, such as rent payments, to assess its suitability and potential impact.

“The addition of alternative data will be the beginning of a meaningful step forward in modernizing the credit infrastructure in Canada and improving access to credit,” Equifax said in a news release. “The inclusion of rental payments in credit scores is an important step to ensuring credit and mainstream financial services are more accessible for qualifying Canadians.”

Adding rental payment information could potentially improve or establish credit scores for about five million Canadians, according to an Equifax study. This could expand the pool of qualified consumers eligible for various forms of credit.

"Renters are a growing part of the Canadian economy, and it’s time they are recognized for making their rent payments on time," said Equifax Canada president and CEO Sue Hutchison. “Equifax Canada has been leading the way and modelling how rental payments, just like mortgage payments, can help build a credit score. This is so important for young Canadian consumers, new Canadians and other underserved consumers."

Aligning with government priorities

Equifax’s effort is part of a broader move to update the country's credit system by adding non-traditional data sources that better represent a consumer's financial behaviour.

The federal government recently announced plans to have rental payment histories count toward credit scores as part of efforts to support renters.

"Renters matter, and young Canadians put a lot of their hard-earned money toward rent. We think that should count for a lot more," Prime Minister Justin Trudeau said when announcing the initiatives last month.

Ottawa also urged banks, fintechs, and credit bureaus to develop tools that allow renters to voluntarily report their rental payment history.

The government believes this could strengthen renters' credit scores, making it easier to qualify for a mortgage or secure lower interest rates, thereby facilitating a path to homeownership.

Potential downsides

While Equifax and others welcomed the move, renter advocates warn it could pose risks for lower-income individuals who may struggle with high rental costs.

Read more: Rental payments in credit scores: Could it backfire?

Elizabeth Mulholland, CEO of Prosper Canada, pointed out that individuals, especially those struggling with high rental costs who may not always manage timely payments, should have the option to choose whether their rental payment history is shared with credit bureaus.

"If you just blanket build it in, that could be problematic for a lot of low income people and vulnerable people," Mulholland said.

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