87% of Renters Think Rent Payments Should Count Towards Their Credit

Recent economic conditions have made financial goals like achieving stability or buying a home harder than ever. Renters, in particular, face unique challenges. As rent prices continue to rise to all-time highs, aspiring homeowners have less money left each month to save for a down payment. Those large rent payments don’t contribute to building their credit either, which could help them qualify for better mortgage rates later. 

To improve fairness for renters, the Government of Canada recently announced measures in the Federal Budget for rent payments to contribute to credit scores, emphasizing that “renters deserve credit for their on-time rent payments, which will make it easier to qualify for a mortgage, and even at a lower rate” to unlock paths for more renters to become homeowners.

To get insights into Canadian renters’ experience with credit, their financial challenges and their home aspirations, we surveyed over 1,500 Borrowell members who are renters to learn more about their outlook.

Survey methodology: An online survey of 1,568 Canadian renters who are Borrowell members over 19 years old was completed between May 21 to May 31, 2024. No margin of error can be associated with a web survey. For comparative purposes, a sample of 1,568 respondents would have a margin of error of ±2.5%, 19 times out of 20.

87% of Renters Think Rent Payments Should Count Towards Their Credit History

While mortgage payments count towards your credit score, Canadian renters who pay just as much each month in rent don’t get any recognition on their credit report for making these on-going rent payments, even when they span years.

Results showed that over 80% have been renting for 3 years or more, and 51% have been renting for 11 years or more. Out of these renters who have been renting for over a decade, half report paying rent of $1,000 to $2,000/month, translating into $132,000 to $264,000 of rent over 11 years, or more than an 18% down payment on an average $704K Canadian home today.

Renters who recently entered the market or leased a new home, now face all-time high Canadian rent prices of over $2,200. That $2,200 monthly rental payment is the equivalent of the monthly payment on a $360,000 mortgage (assuming a 5% interest rate, 25-year amortization) - but not reported on your credit report if you’re making that payment as a renter.

Given the length of time and the amounts that renters sink into rent, the lack of recognition on their credit reports points to the unfairness of the credit system for renters. It’s no wonder that 87% of the renters surveyed feel their rent payments should count towards their credit.

65% of Renters Say They Would Be in a Better Financial Situation Today if They Had Started Building Credit Earlier

Despite renters demonstrating responsible financial behaviour through regular payments of rent over the years, renters cited facing challenges accessing financial products due to their credit. Among renters surveyed:

• 59% said their score limited/limits their credit card options

• 51% said their credit score hasn’t been, or currently isn’t, strong enough to get the mortgage they want

Overall, 65% of renters said they would be in a better financial situation today if they had started building credit earlier. This sentiment was consistently shared across all age groups, pointing to the importance of credit across all life stages.

Only 36% of Renters Believe They’ll Ever Afford to Own a Home

Faced with a multitude of affordability challenges, including rising prices for housing and cost of living, renters have a bleak outlook when it comes to homeownership aspirations.

An overwhelming 90% of renters said it’s harder to purchase a home today compared to their parents. In addition, 51% of renters said it’s not possible or they’re not sure if they’ll ever afford to own a home. Only 36% believe they’ll ever afford to own a home, which is a stark contrast to the average Canadian homeownership rate of 66% and highlights a generational unfairness - it’s much harder today for renters to achieve their home purchase dreams.

Newcomers Are Most Hopeful About Buying a Home

On the optimistic side, 27% of all renters surveyed believe it’ll be possible for them to afford a home purchase within the next 5 years. In particular, immigrants who arrived in Canada within the past five years were the most hopeful: 57% believe they’ll be able to afford to own a home within 5 years.

Newcomers were also more likely to cite buying a home or having mortgage options as a top motivation for them to improve or build their credit score. 77% of those who arrived in Canada 3-5 years ago said this was a motivation, while 60% of those who arrived in the last 2 years said this was a motivation. Only 50% of non-immigrants mentioned this as motivation.

The Bottom Line

With renters paying as much in rent as mortgage holders do, yet not getting recognized for that consistent behaviour on their credit report, it’s not surprising that they’ve faced challenges due to their credit. Combined with rising costs in both rent and home prices, their bleak outlook towards homeownership is understandable. 

Borrowell has long championed having rent payments reflected on credit reports, leading us to launch Rent Advantage in 2022, the first service in Canada to let renters report their current rent payments without landlord involvement. Today, we’re proud to launch the first service in Canada that lets renters report up to 24 months of past rent payment history to Equifax Canada, Canada’s largest consumer credit bureau. No landlord involvement is required. 

While building credit with rent payments doesn’t address rising home prices, it will at least give renters a fairer chance at accessing better financial products like lower mortgage rates through having a better credit score.

Learn more about how to report past rent payments to your credit report with Borrowell. For media inquiries, please contact [email protected].