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How to Run a Canadian Tenant Credit Check: A Landlord’s Guide

A credit check is a critical step in finding reliable tenants for your rental property and helps mitigate risks. A thorough tenant screening process that includes a credit check can help you assess a potential tenant’s creditworthiness, financial stability, and rental history and is a must-have in every landlord’s toolkit. Several tenant screening services in Canada offer comprehensive background checks to help landlords make informed decisions. New landlords are frequently unaware of how to access credit reports or the importance of credit screening. In this guide, I’ll explain what a credit bureau is, why credit checks are crucial for landlords, and which services in Canada are the best for tenant screening.

What is a Credit Bureau, and Why Are They Important?

A credit bureau is an organization that collects, stores, and maintains financial data submitted by creditors, such as banks, credit card companies, and other financial institutions. When you apply for a loan, utilities, or a phone, your financial records are accessed and provided to your creditors as a credit score or FICO score.  In Canada, Fair Isaac Corporation (credit scoring model, abbreviated to FICO) scores range from 300 (lowest) to 850 (highest). The higher your score, the more likely you are to be approved for loans and to receive the best interest rates. In Canada, the two major consumer credit bureaus are Equifax and TransUnion. They compile this information into credit reports, providing banks and other lenders with insights into an individual’s creditworthiness.

For landlords, accessing a credit report is a critical step in tenant screening. It lets you to see the tenant’s history of late payments, bankruptcies, or collections. This information can help reduce the risk of renting to someone who might default on rent or cause property damage.

Credit reports offer more than credit scores, late payments, bankruptcies, or liens; they also track an applicant’s residence and employment history, which is invaluable information to cross-reference with the tenant application.

Tenant screening services have grown in leaps and bounds in the last several years and offer many products to support landlords throughout the entire rental process.

Registering with a Tenant Screening Service

Landlords must register with a tenant screening service to run credit checks on prospective tenants. This process is fairly simple, takes very little time, and typically involves verifying your identity and providing proof of property ownership. Once registered, you can run credit reports online and receive the results within minutes.

Top Canadian Tenant Screening Services

Here are the top three tenant screening services in Canada, along with their key features and benefits for landlords:

SingleKey

SingleKey is known for its comprehensive tenant screening and risk mitigation services. It offers a full Equifax credit report, including tradelines, bankruptcy records, and collections. In addition to credit checks, SingleKey provides background checks, court record searches, social media scans, and income and employment verification. They also offer services to tenants who can simplify their rental process by completing a universal rental application and background check. A universal application bypasses the need for tenants to email/text personal information to strangers, allows sharing with multiple landlords, reduces the amount of credit hits, and streamlines the rental process by allowing tenants to apply to multiple rentals with a single application.

Key Features

  • Fast results: Receive reports in less than five minutes.
  • Pre-screening tools to narrow down applicants.
  • Pre-filled leases (available in select provinces).
  • Additional free tools like rent collection and team accounts for property management.

Pricing

  • $24.99 per report with no subscription fees.
  • Option to have tenants pay for their reports.

Unique Services

  • Social media scans to get a broader perspective of the tenant.
  • Rent collection tool with automatic reminders and credit reporting for on-time payments.
  • Rent Guarantee Program (additional cost) to cover rent payments if the tenant defaults.
  • Resources for landlords
  • Tenants can register/report on-time payments to build credit scores.

RentCheck

RentCheck has been in the tenant screening business since 1976. It provides access to credit reports from Equifax or TransUnion and focuses on creditworthiness and rental history.

Key Features

  • Various membership levels to suit individual needs.
  • Offers basic criminal background checks and tenancy history verification.
  • Affordable membership starting at $75 annually, with additional fees for setup.

Pricing

  • Credit reports start at $38.
  • Membership fees may be waived for members of approved associations.

Strengths

  • Trusted provider with a focus on credit reporting.
  • Basic background checks and PeopleTrace to track individuals avoiding debt repayment.

FrontLobby

FrontLobby provides tenant screening and other services like rent reporting to credit bureaus. It offers an Equifax credit report and background check focusing on rental history and payment behavior.

Key Features

  • Rent reporting tool to build positive rental history.
  • Debit reporting tool to help landlords collect rent debt from past tenants.
  • Offers credit reports at different price points based on the membership plan.

Pricing

  • Basic plan: Tenant screening bundle for $24.99.
  • Premium plan: Screening bundle for $18.99 with a monthly fee.

Unique Features

  • Internal recordkeeping platform for tenancy management.
  • Email communication capabilities for tenant interaction.
  • Landlords/Tenants can report on-time payments to assist tenants in building credit scores.

Key Considerations When Choosing a Tenant Screening Service

When deciding which tenant screening service is best for you, consider the following factors:

  • Comprehensiveness: Does the service provide a complete picture, including credit score, rental history, and background checks? Is it easy to read and understand?  If  a screening service boasts low rates per report and instant access but is impossible to read, or if the staff are unable to help with the interpretation, it’s of no use.
  • Speed and Convenience: How quickly do you get the results, and is the platform user-friendly?
  • Pricing and Flexibility: Does the pricing align with your budget, and are there flexible payment options?
  • Additional Services: Does the service offer other useful tools like pre-filled leases, rent collection, rent guarantees, or landlord resources?
  • Customer Support: Is the customer support team responsive and helpful?

Legal Compliance and Privacy Considerations

Many landlords need to be made aware that once they own a rental property, they must ensure compliance with provincial and federal regulations when conducting credit checks on tenants. Key considerations include:

  • Fair Housing Laws: Avoid discrimination based on race, religion, or other protected characteristics.
  • PIPEDA Compliance: Obtain written consent from applicants before conducting background checks.

Conclusion

Landlords in Canada must have a thorough tenant screening process that includes credit checks. SingleKey, RentCheck, and FrontLobby are among the top tenant screening services, offering unique features and benefits. By selecting a service that meets your needs and complies with legal regulations, you can make informed decisions, reduce risks, and increase the chances of finding reliable tenants who keep your rental property profitable.

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