Borrowell will start reporting rental payments to Equifax Canada


A for rent sign outside a home in Toronto on July 12.COLE BURSTON/The Canadian Press

Renters in Canada will soon be able to include their monthly rent payments on their credit reports.

Fintech company Borrowell Inc. announced Tuesday that it will begin reporting rental payment information to Equifax Canada, one of the country’s two major credit bureaus, before the end of July. The service, called Borrowell Rent Advantage, will be available to those who have a user account with the company for a monthly fee of $5.

“As a renter, you don’t get credit for making those payments on time because the credit bureaus can’t see them,” said Andrew Graham, CEO and co-founder of Borrowell, which offers Canadians free credit from Equifax. grading checks and comparing them to loans and credit products for which they may qualify. “For the first time in Canada, we’re letting tenants solve that problem by building a credit history with their rent payments.”

The announcement comes at a time when rapidly rising mortgage rates are forcing a growing number of young adults to shelve their home-buying plans, even as they face sky-high rents as renters.

Canadians who rent their homes often pay more than those who pay a monthly mortgage, said Julie Kuzmic, senior director of compliance for consumer advocacy at Equifax Canada. “We want to be able to add that information to your credit report to paint a more accurate picture.”

A history of paying in full and on time generally helps consumers develop a good credit score, which estimates the likelihood that a borrower will pay creditors. But credit scores have traditionally been based on debt, rather than bill payment data. This meant that while homeowners could build their credit history with their mortgage payments, a tenant’s history of paying rent before the due date would generally not count.

While third-party providers have provided rental payment data to credit bureaus in the United States for years, Canada has lagged behind.

Some landlords in Canada submit rent payment information to credit bureaus, but Borrowell’s new service will be the first to allow tenants to self-report their rent payments, according to Ms. Kuzmic.

Reporting rent payments to credit bureaus can help Canadians who don’t own a home improve their credit scores, with the potential to eventually allow them to access more competitive mortgage rates when they’re ready to buy, Graham said.

However, it’s unclear to what extent Borrowell’s underwriting would also benefit low-income renters.

Low- and moderate-income households in Canada are more likely to rent and have lower credit scores or no credit history. A recent Borrowell survey of 2,873 respondents with below-average credit scores of less than 660 found that 68 percent were renters. By comparison, about 30 per cent of households in the country rent, according to Statistics Canada.

Low-income renters often have to take on high-cost debt, borrowing from entities like payday lenders that don’t necessarily report payment data to credit bureaus, said Brenda Spotton Visano, an economics and public policy at York University.

The ability to build credit history with rent payments could help low-income renters in ways that go beyond the opportunity to access credit products like credit cards and car loans and do so at lower interest rates. low, Kuzmic said. For example, a good credit score could help them qualify for a new lease or improve their job prospects, since many landlords and employers require credit checks when screening rental or job applicants.

But Borrowell’s $5 monthly fee for its rental reporting product is likely to be a financial barrier for low-income households, Professor Spotton Visano said.

Mr. Graham, for his part, argues that Borrowell will provide a key service. While banks and other lenders provide information on mortgage payments, it has been more difficult to receive reliable data from the myriad of large and small landlords collecting rent payments.

Borrowell will collect and verify the information of the tenants who sign up for the new offer and connect the bank account from which they pay the landlord. Tenants must indicate which monthly transaction is their rent payment.

Borrowell currently has more than two million users across Canada. Of these, more than two-thirds do not have a mortgage on their credit profile and are likely renters, the company said.

Like all other Borrowell users, those who sign up for Rent Advantage will receive marketing emails about financial products like loans and credit cards, although they can opt out.

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