How your rental payments can help build your credit history – Moneysenense

Rent report can help increase the credit scores

“Your rent is your biggest monthly obligation for debt payments, so it is unfair that it is not counted to build your credit,” said Viler Lika, founder and CEO of rental service company Singeykey.

Companies such as Singeykey, Zenbase, Lorrowell and Frontlobby offer such rental reporting services, with different costs and requirements. SingleKey works with landlords and real estate managers in Canada and screens more than 15,000 rental applications every month. Landlords pay a fee of $ 30 for a tenant investigation and tenants pay $ 8 per month to report their rental payments on the SingleKey platform.

“This is a very powerful tool for graduating to home ownership as a tenant because you demonstrate the lender that you have the opportunity to pay a large amount,” said Lika.

The platform is also suitable for pauses in rental report – when you can go back in with your parents, for example – without harming your credit.

Rental report is not risk -free

Lika is of the opinion that rental report will make homes more accessible to tenants, while it also reduces the risk of delinquency of tenants for landlords. However, Alex Leduc, CEO and head broker of the Mortgage Brokerage company Perch, established in Toronto, warns that such a disclosure can bring with his own worries. “If [you] Stop reporting, it would be a red flag for lenders and they would dig deeper, “he said.” And if [you] Keep reporting and tones in arrears [your] credit report then [your] Credit score would probably fall as a result. “

Leduc advises to opt for a rental report program if you expect to miss a payment or even pay a few days late. “Otherwise you just seemed a light on a poor repayment history that would have potentially unnoticed,” he said.

However, Leduc is of the opinion that rental report can be favorable, especially for old tenants, new immigrants or aspiring homes with little or no credit history. “Not having a credit score is a huge obstacle to getting credit,” Leduc said. “When you try to get a mortgage, you ultimately ask a lender to give you hundreds of thousands of dollars … They want to know that you have managed to successfully credit before.”

He said there are three important components for drawing up a mortgage application: credit score, down payment and income. And although a down payment can often be resolved – for example by receiving gifted funds from family – a bad credit can have a ‘dealbreaker’.

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Insight into credit assessments and scores

Money Mentors CEO Stacy Yanchuk Oleksy said that credit ratings and credit scores are often misunderstood.

A creditworthiness is given for each of your credit products. It is based on a scale of one to nine, where one is the best (which means that you make at least minimal payments on your credit card, for example). As you miss payments, you go up the scale. A creditworthiness of nine would indicate a debt in collection or even bankruptcy.

All this information contributes to your credit score-a number of three digits from 300 to 900 that is used as a predictor of how you are likely to repay your debts. The higher the score, the more ‘creditworthy’ you are.

Oleksy, who is also a certified credit adviser, said there are often misconceptions about what your credit score builds and damages. For example, if you get a high credit limit on your credit card, it is even if you pay it completely every month – she can actually be disadvantageous, she said. “When your credit score is calculated, this looks at all that available credit and says that it is debts because [theoretically] You could go to the city tomorrow [and spend it]. “

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