Renting Without a Credit History

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Ah, credit history. Many newcomers to Canada think that the absence of one is a major stumbling block to renting that first place to live. 

No worries. To rent a home in Canada without a credit history is possible - but it’s definitely more challenging. 

While it’s ideal if you have a credit history, there are some options that you can consider if you don’t.

The first step towards moving to Canada is to find a place to live. Before you can rent a home in Canada, you must fill in an application form and return it to the landlord. Most landlords will insist on doing a credit check before they agree to rent a home to you.

Showing a good credit score can be a challenge if you have only been in Canada for a short while and don’t have a Canadian credit history.

And it’s a fact that many newcomers are surprised to find that they must have a good credit score to rent a home in Canada. It’s also true that many newcomers are unable to meet this requirement.

 So what options can you consider to overcome this obstacle?


Tips to rent a home in Canada without a credit score


1. Live with a family member or friend until you can rent a home

If you are lucky to have family or friends who can accommodate you, use this time to build a credit score. Once you have built a credit score, you can then show it to the landlord to prove your ability to rent a home.

2. Book temporary accommodation for a few months until you build a credit score

Hotels, hostels, and websites like Airbnb offer long-term (and short-term) booking options. Hotels tend to be more expensive, while hostels can be budget-friendly. Some hotels and hostels even provide free breakfast. Such temporary accommodation would be ideal to build a credit score and then rent a home.

3. Offer more than the expected deposit

In Ontario and Quebec, tenants do not pay a deposit. In Ontario, landlords ask for the first and last month’s rent in advance.

A maximum of one month’s rent is charged in advance as a security deposit in Alberta, Manitoba, New Brunswick, Northwest Territories, Nunavut, Prince Edward Island, Saskatchewan, and Yukon.

However, in British Columbia and Nova Scotia, the security deposit is a maximum of half a month’s rent. In Newfoundland and Labrador, it’s three-quarters of a month’s rent.

The landlord cannot ask you for more months of rent upfront. However, in the absence of a credit score and probably a job offer, you could offer to pay any additional amount that’s beyond the prescribed amount.

4. Provide a local guarantor

 A guarantor is an individual who agrees to pay the rent on your behalf in case you are unable to do so. This arrangement is legally binding. Therefore, it’s family or close friends who usually agree to sign such an agreement.

This gives you the ability to rent a home and guarantee the landlord that the rent will be paid for no matter what.

5. Provide proof of savings to rent a home

If you can provide a bank statement with a large amount of money that could cover the rent for a few months, landlords might accept your offer. A bank statement with savings shows your ability to afford the rent payments.

6. Look for a house-share or a sublease

You can choose to share an apartment with someone else who has a good credit score and has taken a lease in their names. In such cases, they will rent out a certain portion of the accommodation for you or have the main lease in their name.

Kijiji and Craigslist are websites to start your search for a roommate. However, please be mindful of possible scams that have originated out of Kijiji and Craigslist. Do not make any payments upfront unless you have physically seen the location and signed the appropriate paperwork. If it is too good to be true, it is possibly a scam.

7. Consider remote neighbourhoods to rent a home

Accommodation in prime locations is always in demand, and landlords often have a long list of tenants to choose from. Choosing less popular locations could mean you are the only applicant, and there would be a high chance of being accepted as a tenant.

Before committing to the lease, make sure the location has access to public transport if you do not have a car as yet.


What is a credit score?

A credit score is a three-digit number that is a part of your credit report. This number indicates how well you manage credit and how risky it would be to lend money to you. A healthy credit score is essential to rent a home in Canada.

You gain points when you use credit in a responsible manner. You lose points when you have trouble managing credit or if you apply for too much credit. Therefore, the higher you score on your credit report, the more likely you will be considered for credit. In Canada, the leading credit rating companies are Equifax and TransUnion.

Your credit report contains important information about you, like your name, date of birth, current and previous addresses, and social insurance number.


Factors that affect your credit score

There are several factors that can affect your credit score. It’s important to know what affects your credit so that it will be easier to rent a home. Some factors include:

  • Length of time you had credit
  • Balance that you owe
  • Number of missed payments
  • Amount of your outstanding debt
  • Number of credit applications you make.


Who can view your credit report

Many groups can view your credit history so it’s essential to monitor it to ensure you’re in good standing. Here are some of the people and organizations that can view your history:

Many landlords turn away tenants who do not have a satisfactory credit score. The reason is landlords want to rent a home to tenants who show that they can pay rent on time and won’t fall back on payments.


Ways to build a credit score

  • Apply for a credit card when you open a bank account. Many banks offer low limit credit cards to newcomers without a credit score.
  • Get a postpaid mobile phone connection instead of a prepaid plan. If the mobile phone company cannot offer you a postpaid connection without a credit card, offer to pay a refundable or deposit upfront.
  • Pay off all your dues in full each month, including your renters insurance.  By doing this, you can honour your commitment to repay the dues, increase your credit score, and be considered a responsible borrower.

To rent a home in Canada without a credit history can be a stressful process. However, these tips will help you build your credit score and know your options to rent in the absence of a credit score.

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