When you’re preparing a rental property for a new tenant, your main priority is peace of mind. You need to know that your investment is protected and that the rent will be paid on time. In Ontario, this means tenant screening is not just standard practice—it’s essential.
The cornerstone of this screening is the credit check. However, in Ontario, the rules are specific and require precise compliance with both the Residential Tenancies Act (RTA) and the Ontario Human Rights Code.
To keep you informed and your screening process legally compliant, here is the updated landlord’s guide to credit checks for tenants in Ontario.
1. Establishing the Ground Rules: What’s Legal?
As a landlord, you have the right to request credit checks and references to assess a prospective tenant’s creditworthiness. This is a primary tool for managing financial risk. However, the process must follow a strictly defined legal path.
Written Consent is Non-Negotiable
You cannot legally run a credit check without obtaining written consent from the applicant. This clause should be clearly stated on your rental application form. Running a check without signed consent is a violation of privacy laws.
What You Can (and Cannot) Ask For
To accurately pull a credit report from a bureau like Equifax or TransUnion, you generally only need:
- The applicant’s full, legal name.
- Their current, complete address.
- Their date of birth.
While many believe the Social Insurance Number (SIN) is required for a credit check, you cannot legally require an applicant to provide it. They may refuse, and you cannot reject their application solely because they declined to share their SIN.
2. Navigating the Human Rights Code
Tenant screening is where the Residential Tenancies Act intersects with human rights legislation. The Ontario Human Rights Commission (OHRC) focuses on ensuring that credit checks are used fairly and without discrimination.
“No History” Is Not “Bad History”
Many strong applicants—including newcomers to Canada and younger first-time renters—may have a “thin” credit file. Legally, a lack of credit history should not be treated as a negative factor. If an applicant has no credit score, you must consider other factors, such as employment verification, reference letters, or a guarantor.
The Status of “Rent-to-Income” Ratios
The OHRC prohibits using a strict “rent-to-income” ratio (such as the 30% rule) to automatically disqualify an applicant. If an applicant provides valid income verification, credit, and rental history, you must evaluate their overall ability to pay rather than relying on a mathematical percentage of their income.
3. Best Practices for Screening
Given these regulations, here is how to effectively and legally evaluate a tenant:
- Use Professional Screening Services: Utilize secure, standardized tenant screening services that manage consent and data security compliance on your behalf.
- Accept Soft Checks: If a tenant is concerned about “hard pulls” impacting their score, you can accept a recent, official credit report provided directly by the applicant from Equifax or TransUnion.
- Consider Guarantors: If a potential tenant has a lower credit score but is otherwise an ideal candidate, a guarantor (co-signer) provides an additional layer of financial security for your lease.
The goal of the screening process is to protect your property and ensure stable rental income. By understanding and respecting Ontario’s credit check regulations, you protect your investment from both vacancy loss and regulatory risk.
