Robot voice: I'm sorry, your credit score is below 700. You do not qualify to rent here. You do not qualify for shelter. Goodbye. (Screen goes black).
Is this the future we want? Where there are the same number of empty buildings as there are people living on the street? Where we do not consider poor people worthy of the basic human need of shelter?
In the Province of Ontario, only 25% of residential rental properties are owned solely by the individual landlord, being an individual person. (www150.statcan.gc.ca) With over half of rental housing being made up of multi-unit vertical apartment buildings, the majority of rental properties have Corporate ownership, with a hired property management company overseeing operations.
Therefore, as part of the rental machine of modern Ontario living, with the owners and operators being voluntarily faceless, tenants are treated as commodities rather than living beings who have a human right to affordable shelter.
For dozens of reasons, over the past decade, there has been a drastic reduction in available rental properties in Ontario, nevertheless across Canada. As such, the average rent amount has increased by 54.5% and the number of homeless people has grown by over 25%.
As per the general rules of economics, when there is a low supply but high demand for a product, the seller of that product is permitted to charge whatever they want, because the price is set by whatever the buyer is willing to pay.
Therefore, some landlords are not only charging greedy exorbitant rental rates for their properties, they are also being deliberately more selective of who they choose to rent to. To save costs, the traditional 'background check' process has now been streamlined, allowing landlords to unilaterally disqualify potential tenants based solely on one data point: their three-digit credit score number.
What is a 'background check'?
This term can be interpreted very differently, depending on a person's knowledge and experience of what this report is, and what it is used for.
Most people, when they hear 'background check' immediately think of a Police criminal record check. That report can only be obtained directly from the Police, and generally, only the subject of that report can request a copy of it. A formal police report will only provide information regarding a person's unlawful activities, such as charges, warrants or full convictions.
A landlord, nor property management company, should ever be asking a potential tenant to provide a copy of their Police criminal record check, as this report contains private information somewhat irrelevant to renting property.
If a proper (non-criminal) thorough background check is completed, then there is a very high chance that evidence of any illegal activity a person may be involved with will be found through alternate resources.
When someone does an online search for 'tenant background check in Ontario', they are most often directed to a business who utilizes technology to provide information quickly for a very low price. What they are purchasing is not necessarily a full 'background check' but rather only a 'credit check', meaning the provider has pulled the subject's credit report.
They will then sell portions of information from this report for a set price. For example, for $30, you can have a list of the person's employee history, or for $20 you can have a list of known pseudonyms.
What is a Credit Report?
A credit report is a written history record that tracks your financial activities, both good and bad, helping people decide if they would like to do business with you. In Ontario, there are two credit bureaus that administer your credit report - Equifax and TransUnion.
Every time you do an electronic financial transaction, this is reflected on your credit report. Some transactions that may cause a change to your report could be leasing a car, refinancing a mortgage, purchasing a new phone, or making a credit card payment late.
You have a legal right to obtain a copy of your credit report for free every year. It is a good practice to review the details of your report regularly to verify that everything it shows is correct.
What is a Credit Score?
A credit score is a three-digit number that represents your creditworthiness. This number has been calculated based on the information that is showing on your credit report, and is usually displayed clearly at the top of the page for easy (and lazy) reference.
With a big-business-minded Corporate owner, who naturally prioritizes profit margins over humanity, having such an easy metric available to use to determine if this person qualifies to rent a living space in their building is a no-brainer.
Therefore, rather than a potential tenant being considered as a human being who needs somewhere to live, they are simply being judged based on their three-digit credit score number.
On a scale of 300 to 900, the magic number usually required to rent from a large corporate-owned rental space is 700. If your number is below 550, your rental application may be immediately ignored and discarded.
How do you read a credit report?
Most readers of a credit report have not taken the time, nor the considerations, to learn how to read the details within the document. This is because they are only concerned about either adding information to your report or they have been given threshold figures to check your three-digit credit score number against.
If the car salesman sees a credit score of 660, knowing his threshold number is 600, of course he will put through the sale because he's excited for his commission. He does not want to potentially lose the sale because the buyer started to lose interest when he took a long, quiet time to read through the details of their credit report.
Within the specific trade information on a credit report, late or missing payments may be indicated by an R4 rating. If there are several recent R4s showing on a person's report, this indicates that they have run into financial troubles and may no longer be able to afford to keep paying their current obligations. Due to the reporting delay of the credit bureau's system, although new R4s might be reported, this information may not be reflected in the overall three-digit credit score number for a few weeks.
Although the chronology of geographic location is usually presented on a credit report, there are no dates next to employment history. This information has been provided directly by the subject of the report to the person who is entering it - be it a bank clerk or a car salesperson. It has not necessarily been verified, only believed and recorded.
What if a person does not have a credit report?
If someone has recently moved to the area from a different country, they will not have a credit report until they obtain a Canadian financial product, such as a bank account or credit card, etc. If someone has claimed bankruptcy, then their credit report will be 'reset' as a blank slate, and it may take them some time to 'rebuild' this. A person may also choose to live a simple lifestyle and not need to or choose to use the credit system.
As a landlord is not legally obliged to rent out their space to anyone, they are permitted to decline a rental application if the person has a poor credit score or no credit history. The morality behind this issue is a different story.
How is a 'thorough open background check' by Agent K different from the others?
Agent K recognizes that a tenant is a person who has a human right to safe and affordable shelter. Although the landlord is the client and the person paying for the background check, Agent K acts in the role of an arbitrator, ensuring all parties involved in the interaction are treated fairly and respectfully through the entire process.
The landlord and tenant are not just entering into a written contract; they are beginning a social relationship. This is an especially important factor to consider when the tenant will be residing on the same premises as the landlord, an individual, who owns that property. For example, when a person rents out a separate basement apartment located in their primary residence.
Agent K not only pulls a credit report to verify the financial situation of this person, she will prepare a full profile of who this person is beyond their three-digit credit score. Then the client can decide if this person would be a good choice to rent to, nevertheless live with.
Yes, the potential tenant's credit score and financial position will still be taken into consideration. But so will many other factors that may not show on a credit report, such as:
- verifying their identity prior to executing the paperwork
- verifying how they earn income or where their financial resources are located
- confirming the property meets their wants: parking? outside space? anticipated water usage?
- do they have any pets? do they smoke cigarettes? do they play any musical instruments? do they cook fragrant foods? what is their work schedule?
The answer to these questions is not 700.
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For only a small percentage of one month's rent, Agent K Private Investigations Inc. offers a thorough open background check service on your potential tenant, which includes contacting three references directly. www.agentkpi.ca
