When a landlord is choosing a prospective renter, they have the right to ask for written permission to request a credit report.
Credit checks shed some valuable insight into your financial situation, which could influence a landlord to either accept you as a tenant or reject you.
What is a credit report?
A credit report details information about any loans you’ve taken out within the last six years, along with how often you meet your payment deadlines. The report also offer details about the credit cards under your name and the amount of credit you have at your disposal and how much you have used.
Before hunting for a place to rent, renters should request a free copy of their credit report from the credit reporting agencies, Equifax and TransUnion, to see their current status. These reports will also include a credit score, which is based on your use of credit to come up with a score. This score is based on multiple factors, such as the type of credit you use, your payment history, the amount you owe on credit, the length of your credit history and any new credit you may have applied for.
How can you improve your credit report score?
If it’s the first time you’ve checked your credit score and you’re shocked by your standing, you’ll be glad to hear that the score isn’t set in stone.
Some people may have no credit history, which while this means they haven’t borrowed money, it also doesn’t offer any insight into your financial risk. In a case like this, you may need to provide a guarantor letter which will names a family member or close friend to be liable for the rent if you are unable to pay. Meanwhile, the best way to start filling your credit report is by properly managing your credit card use since this way any potential landlords will see you as a responsible individual.
If you made mistakes when using credit, whether it’s by making a late payment or racking up a great deal of debt with your credit card, the only way to improve your credit score is to practice good money habits, and wait for your past behaviour to fall off the report. Make sure you pay any loans and bill payments on time and as your good habits continue over time, the weight of your old habits will affect your score less and less.
Both positive and negative information will stay on file for about six years, which is why it’s important to adopt good financial habits right off the bat. Depending on the type of negative information, whether it’s a bankruptcy or a late bill payment, the timelines differ with the amount of time it stays on your file.
To avoid any ugly surprises, check your credit report before looking for a place to rent. If the results aren’t as great as you’d like, follow through with good habits to improve your report overtime.
The information provided in your credit report is useful to landlords since it offers them a glimpse into the amount of debt you’re carrying, whether you have enough money to make your payments and whether you have a history of paying in a timely manner. This info coupled with your letter of employment, which details your income, will offer the landlord a barometer into your financial picture, which may either encourage them or dissuade them from renting to you.
Renting Toronto will always conduct credit checks when consider renters for condos for rent in Toronto. Our company has been in the business of placing competent, qualified tenants in owners and landlord’s properties since 1999 and owners have the final say on all prospective tenants.