Can A Landlord Check Your Credit In Canada?

Can A Landlord Check Your Credit In Canada?

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated April 25, 2022

Are you ready to move into your first apartment? Unfortunately moving into a new pad isn’t as easy as loading up a moving van and hauling all your possessions up the stairs. It’s important to know what your potential landlord will be looking at before they approve you. So, before you start packing up all your stuff into boxes, take a look at this article and find out the things you’ll need to take into consideration before renting an apartment.

Can Landlords Perform Credit Checks? 

Yes, it is legal for a landlord to pull a tenant’s credit report when assessing them. However, a landlord must obtain written consent from the tenant before performing a credit check. These credit checks are considered a hard inquiry and may negatively affect your credit scores. 

Landlords may ask for your consent by sending you a separate document to sign or they may include it in your rental application, which authorizes them to check your credit.

Why Do Lenders Check Your Credit? 

Once you’ve gone to visit a potential apartment, and you’ve talked to the landlord about the possibility of you moving in, they will perform a credit check before approving you as a tenant. This is to make sure that you’ll be able to keep up with rent payments every month and to see whether or not they’ll be taking on too much risk by renting to you. 

How Will Your Landlord Access Your Credit Report? 

Once your landlord has your consent, they may pull a copy of your credit report from either Equifax or TransUnion; Canada’s two credit bureaus. In some cases, a landlord may also access your credit report through third-party services that do background and credit checks on tenants. 

What Do Landlords Look For When Checking Your Credit? 

When a landlord checks your credit, they’ll be able to see your credit score and credit history. They’ll use this information to evaluate your risk as a renter. Here are some things your landlord will check when checking your credit: 

Credit History

Every time you make a payment, are late on making one or fail to keep up with payments altogether, the information goes on your credit history. So if you have a lot of late, missed or partial payments, it can indicate that you’ll have trouble paying your rent on time. This can cause the landlord to reject your application. 

Credit Score

Landlords will use your credit scores to determine your likelihood to pay rent.  If you have a low credit score,  your landlord could come to the conclusion that you’ll have problems paying your rent. So, it’s important to get information on your credit history and score before you start looking at apartments.

Debt Load

If you’ve had a lot of problems with debt in the past, your prospective landlord will see this and will probably not approve you. Even if you’re moving into a low-rent, small apartment, your future landlord may rent to you if your income is not high enough to cover your rent and debt obligations. 

Derogatory Remarks 

Many landlords will also look for any derogatory remarks on your credit report to determine your financial risk and financial responsibility. Previous evictions, a foreclosure on your house, and accounts in collections are all red flags. Even a record of excessive amounts of open and cancelled credit card accounts could be considered a red flag because it indicates that you may be financially disorganized.  

The Tenant Screening Process

When it comes to landlords, their apartment properties are their business. Therefore, like any business, they take on a significant amount of financial risk when bringing in new tenants who are essentially becoming their clients. Every time someone they’ve approved fails to make their rent payments or needs to be evicted, it’s going to cause problems for the landlord’s income. Because of this risk, they’ll want to determine not only if you have good credit, but good financial standing in general, as well as whether you’re prone to causing other problems, of the illegal nature or otherwise.

Will My Landlord Perform A Background Check?

For obvious reasons, most landlords probably won’t rent to someone who seems suspicious, has been evicted a lot, or has a prominent criminal record. So, at the same time as they’re running a credit check on you, landlords may also perform a “Tenant Screening Report.” This is a form of background check, which will help them get a better idea of who they’re renting the apartment to. This includes, but is not limited to,  a criminal background check, a history of eviction or “unlawful detention” (meaning a tenant has had to be legally evicted or removed from their dwelling or workplace), and verification of your current employment.

Can You Rent An Apartment In Canada With Bad Credit?

Having a low credit score is not necessarily the end of the world. When it boils down to it, a good landlord wants to know, first and foremost, that they’ll be receiving the rent on time every month like clockwork. 

How To Secure A Rental With Bad Credit? 

  • Get A Cosigner – Another good idea might be to get the help of a parent, relative or good friend to co-sign a lease with you. This way, the co-signer takes on the lion’s share of the rent, in the event that you can’t, and will assure the landlord receives full payment each month. 
  • Offer A Higher Security Deposit – On top of this, a little extra motivation for the landlord could be your offering to pay a higher security deposit or throw in a few extra months’ worth of rent.
  • Provide More Documentation – Consider providing your landlord with proof of employment letter, your income tax return, or even 3 months’ worth of bank statements. These documents may illustrate that you can afford the rent payments and will be a responsible tenant. 
  • Provide References – Ask your employer or even your previous landlord to provide a reference for you, this may help convince a potential landlord that you’ll always pay your rent on time.
  • Explain Your Situation – If you’ve got an unfavourable credit score, whether it’s because of recent unemployment, or temporary problems with debt, try explaining this to the landlord. With any luck, they’ll have a bit of faith that you’ll bounce back and approve you regardless.

Tenant Credit Check FAQ

Are landlords allowed to check credit In Canada?

In Canada, it is legal for a landlord to check your credit and almost all landlords will do so. Just keep in mind that a landlord must ask for your permission before checking.

Do I have to give my landlord my credit report?

Most landlords will ask for your content to pull your credit report from one of the two credit reporting bureaus. All you need to do is give your consent and they will take care of the rest. 

If my landlord checks my credit will it hurt my credit score?

When a landlord checks your credit, it is a hard inquiry with means it could affect your credit score. All credit scores react differently, which means a hard credit inquiry may affect your score differently than someone else.

Bottom Line

Either way, poor credit doesn’t have to mean staying in your parent’s basement for the rest of your life. However, taking the proper steps to build up your finances and keep your credit score at a reasonable level will definitely help you out in the eyes of your future landlord.   

Rating of 4/5 based on 9 votes.

Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.

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