The Importance of Credit Scores in the Rental Application Process
2 min read
As a tenant looking for a rental property in Canada, you know how competitive the market is. Landlords have various requirements and qualifications for tenants, and one of the most important factors is your credit score.
When landlords screen tenants, they look for creditworthiness. According to a SmartMove survey, 84% of landlords stated that payment problems are their top concern. Your credit report provides landlords valuable insight into your financial history, ability to pay rent on time, and any significant credit mistakes. Many landlords require a credit check as part of their screening process, so having a good credit score gives you a competitive advantage over other applicants.
Credit scores in Canada range from 300 to 900 and are ranked in the following 5 categories:
Poor: score 300 - 559
Below Average: score 560 - 659
Fair: score 660 - 724
Good: score 725 - 759
Excellent: score 760+
According to TransUnion, one of Canada’s two main credit reporting bureaus, the average Canadian credit score is around 650. If you have a high credit score, you are more likely to be approved for a rental property and may negotiate better rental terms. However, if your credit score is low, you may need help getting approved for a rental property or have to pay a higher security deposit or rent.
To improve your credit score, pay your bills on time, reduce debts, and avoid unnecessary credit applications. Maintaining a good credit score as a tenant makes the rental process easier and helps you secure a desirable rental property. Keep in mind that your credit score is a crucial factor in the rental application process, so it's essential to be aware of your score and take steps to improve it if necessary.
References
Collatz, A. (2019, March 18). 7 steps to reducing payment problems with tenants. SmartMove. Retrieved April 11, 2023, from https://www.mysmartmove.com/SmartMove/blog/how-to-avoid-renter-payment-problems.page
Wood, C. (2023, April 3). Average credit scores by province. Loans Canada. Retrieved April 4, 2023, from https://loanscanada.ca/credit/average-credit-score-by-province/
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