If you’re searching for an apartment to rent in Canada, you may wonder about the role of credit checks in the application process. Specifically, many might be concerned about how these inquiries negatively impact their credit score. Let’s explore these concerns in more detail and what you can do to prevent these records from heavily affecting your credit history.

Understanding Your Credit Score

You may hear about your credit score from potential landlords, the bank, and the media, but what is it? Your credit score is a three-digit number, generally between 300 and 850, which represents the credit reports that your credit card company has made based on your usage history and how often and how much you have paid off. The higher the number, the better your credit score. 

If you were able to access your own credit score through your bank, then they may have an indication of if it’s good or if you should improve it. Knowing what a potential landlord may see when performing a credit check can help you apply for apartments at the right times – when your credit score is higher and you can prove your financial abilities.

Do I Need to Get an Apartment Credit Check?

You might. When applying for an apartment in Canada, your prospective landlord could request a credit check. This is a common practice to ensure they have an accurate picture of a prospective renter’s credit history, which can indicate financial reliability. If it is requested, you can ask the landlord how they would like to receive it to better understand whether you need a soft credit score or a hard one.

What Happens When I Get an Apartment Credit Check?

An important part of getting approval for an apartment is to prove your ability to keep up with rent. This is where credit checks and other financial indicators, such as savings and income verification, come in. When the landlord does a credit check through your bank, they are given a number that will give them an idea about your financial history and your ability to pay bills in the past.

The impact of this check depends on the type of credit inquiry. There are two types of credit inquiries: hard and soft.

Hard Credit Check

Hard inquiries occur when a lender, like a bank or credit card company, requests your credit report to make a lending decision. This type of check can lower your credit score by a few points and remain on your credit report for up to three years. 

These checks impact your credit score because they primarily come from potential lenders, so having multiple hard checks in a short period may indicate that you’re getting loans from multiple sources, which may bring your ability to pay into question.

Soft Credit Check

In contrast, a soft inquiry does not affect your credit score. This is typically used for background checks, employment verifications, and rental applications. When a landlord requests your credit history as part of the rental application process, they usually perform a soft credit check. However, it’s important to note that some landlords may request a hard credit check. It is important to clarify which type is needed so that you can make the right choice for yourself and your financial situation.

What Can I Do About the Impact of Apartment Credit Checks?

If you’re concerned about the potential effects of a credit check on your credit score, there are several things to keep in mind:

• Ask the landlord about the credit check they will perform: You can consider negotiating with them to ensure they do a soft inquiry instead of a hard credit check.
• Limit the number of credit checks: If you’re applying to several apartments, try to space out your applications to avoid having hard inquiries on your credit report in a short period. You can also purchase your own credit check and have it on hand to provide to landlords - inquire if this is an option when applying.
• Be mindful of other credit inquiries: In addition to a credit check for an apartment rental, other queries, like applying for a loan or credit card, can also impact your credit score. You should try to space these out as well when you’re applying to apartments.
• Improve your credit: A higher credit score can help you qualify for better rental terms and give you the upper hand over other applicants. To improve your credit, focus on paying bills on time, reducing your debt, and correcting errors on your report to ensure it accurately reflects your creditworthiness.

Some banks may allow you to perform a soft check on your own credit score or display it into your account. If you’re able to see what your score is, that can help you prepare for these checks and what you may need to do to keep your score high.

Ready for Your Next Apartment?

While a credit check is a standard part of the apartment rental process in Canada, it doesn't necessarily have to negatively impact your credit score. Most landlords perform soft credit checks, which don't affect your score, but it's always important to confirm this upfront. 

By being proactive, spacing out your rental applications, and maintaining good credit habits, you can minimize the potential impact on your credit report and improve your chances of securing your ideal apartment.

If you’re ready to find a new place to call home, you’re in luck! At CLV Group, we have a wide variety of rental options across Ottawa. Check out our available apartments to get started.