A Canadian Leasing Agent’s Guide to Defining Credit Report, Credit Score, and Rating

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Investments may cost a lot of money, and not everyone has the means to spend much. But say if someone wants to start a business but does not have enough capital, they can get a loan. It will cover the initial expenses, and the debtor will pay the amount gradually plus interest.

However, asking for a loan is not easy. The banks or lending companies will have to check if someone is eligible to take out a certain amount of money. Of course, they have to make sure they get their money back. The lender will look over the person’s credit report, score, and rating. As a leasing agent, you must orient yourself on the definitions because it will help your career.

Part of your job is checking a tenant applicant’s credit score. You would want to approve someone who can pay the rent and does not have any debt. At the same time, you can explain the significance of credit scores to tenants.

Canada’s Credit Bureaus

There are two major credit bureaus in Canada: Transunion and Equifax. They gather and give out information about a person’s use of credit. Their services help lenders and businesses evaluate a client’s ability to pay before they get into a contract with them. The companies’ websites offer forms that everyone can download and print.

Credit bureaus have rules that identify who can access reports and use them. Those people who are allowed are:
– Car leasing companies
– Banks and credit card companies
– Insurance companies
– Landlords and leasing agents
– Employers and government

Credit Report

A credit report is a summary of a person’s credit history. It starts once they start to borrow money or apply for a credit card. The lender will send all the information to the credit bureaus, which will store it for future use.

Once you request a tenant’s credit report, it will contain detailed information, such as a list of their credit cards and when they were opened or closed. It will include personal data like name, birthdate, address, phone numbers, and employer. A person’s loans and payment history will also reflect on the credit report.

Credit Score

A credit score is a three-digit number that will range between 300-900. The higher a person’s score is, the better. According to Equifax, a score between 660 and 724 is ideal. The credit bureaus will compute the score based on different factors. For instance, they will check how long a person has had credit, if they miss payments regularly, records of bankruptcy, and the number of outstanding debts.

Equifax and Transunion vary in computing the credit score based on the FICO formula. They take the payment history to have the highest account with 35% of the score. The credit history constitutes 25% of the credit score, with the higher score given to longer-held accounts than newly opened accounts. People with good credit scores may have the chance to negotiate lower interest rates.

Credit Rating

A person’s credit rating measures their financial health and how likely they make their payments on time. There is a list of credit history and may have a rating between one to nine. Below is the rating scale to serve as your guide to interpreting credit ratings:

R0: Credit has been approved but is too new for ratings
R1: Pays within 30 days
R2: One or more payments made past the due date (pays within 30-60 days)
R3: Two or more payments past due (pays within 60-90 days)
R4: Pays within 90-120 days
R5: Typically 120 days past due
R6: Does not exist
R7: Settles payments through other arrangements
R8: Reacquire or repossess
R9: Has bad debt and moved without giving a new address

Maintaining a good credit score, rating, and report is essential in the rental business. A landlord may want to purchase a property and will need to acquire a loan, while others may use it to get approved as tenants. You may use it to assess potential applicants too.

Now that you know about credit scores and all that, you can evaluate tenants better. You can apply it as early as now by posting your property listings and looking for future renters. Use Padleads to advertise your listings, and syndicate them to other websites. I’m sure people with good credit scores are out there.

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