When you build a real estate portfolio, finding great tenants is the single best way to protect your cash flow. But for many investors—especially those expanding their holdings—evaluating a rental application stops at a glance at the headline credit score.
That is a mistake.
A single three-digit score doesn't tell the full story. To truly safeguard your rental property, you need to look at the full credit report, know where it came from, and ensure your screening process strictly follows Ontario laws.
Equifax, TransUnion, and What You Should Never Accept
In Canada, there are two major credit bureaus: Equifax and TransUnion. Most landlords prefer a full Equifax report because it is the standard for major Canadian financial institutions, though a full TransUnion report is generally just as valid.
However, not all "credit checks" are created equal. You need to be explicit with applicants about what documents you will and will not accept:
What to ACCEPT: Full credit reports pulled directly from Equifax or TransUnion, or reports generated via verified third-party tenant screening services (such as SingleKey, Certn, or Naborly) that pull directly from these bureaus with applicant consent.
What to REJECT:
- Self-generated PDF prints from free tracking apps: Never accept screenshots or converted PDFs from free apps like Borrowell, Credit Karma, or consumer banking apps. These are easily modified using basic editing software.
- Cropped or incomplete reports: If an applicant only sends page 1 showing a high score but excludes trade-line details, reject it immediately.
- Reports with redacted personal details: Name, birth date, and past address fields must match their application line-for-line.
What Landlords Can and CANNOT Legally Ask in Ontario
Under Ontario Regulation 290/98 of the Human Rights Code and the Residential Tenancies Act (RTA), tenant screening rules are strict. Stepping outside these boundaries can expose you to costly claims at the Human Rights Tribunal of Ontario.
What You CAN Legally Request:
Written Consent: You must get signed, explicit consent under PIPEDA before pulling a credit check or verifying references.
Credit & Rental History: You can request credit references, credit checks, and previous landlord references.
Income Information: You can ask for pay stubs or employer letters to confirm income, but only if you request it alongside credit and rental history. You cannot use income as the sole screening factor.
What You CANNOT Legally Ask or Do:
NO Rigid "30% Rent-to-Income" Ratios: In Ontario, applying a blanket rule that rent cannot exceed a certain percentage (e.g., 30%) of an applicant's gross income is illegal.
NO Social Insurance Numbers (SIN): A SIN is legally optional. You can request it for a credit check, but an applicant is well within their rights to refuse. You cannot reject them for withholding it.
NO Penalizing a Lack of Credit History: Regulation 290/98 explicitly protects newcomers and young adults—a blank credit file cannot be treated as a negative rating on its own.
NO Inquiries into Protected Grounds: You cannot ask about citizenship, family status (e.g., "Do you plan on having kids?"), age, marital status, religion, disability, or if they receive public assistance.
Evaluating Red Flags: Major vs. Minor Financial Risks
Once you have a legitimate, legally obtained report, evaluate the applicant’s debt habits by separating minor hiccups from systemic financial risk.
Major Red Flags (High Risk)
Look out for active accounts in collections, bankruptcies, consumer proposals, or unpaid utility and previous landlord court judgments. These entries indicate that the applicant has a documented history of prioritizing other expenses over fundamental living needs or legal obligations.
Moderate Red Flags (Needs Context)
Pay close attention to maxed-out credit cards, high overall credit utilization, or multiple recent credit inquiries within a short window. These patterns suggest the applicant is living near the edge of their financial capacity, meaning an unexpected personal expense could quickly jeopardize their ability to pay rent.
Minor / Contextual Issues (Low Risk)
Single late payments from several years ago or isolated missed cell phone bills are generally low-risk. Provided their primary debt obligations remain clean, an isolated lapse rarely signals a true risk of rental default.
Common Sense: Cell Phone Bill vs. Maxed-Out Credit Cards
Evaluate how a person manages money, rather than relying solely on a score.
Scenario A: The Missed Cell Phone Bill
An applicant with a 670 score missed a $60 Rogers bill two years ago because a final invoice went to an old email address. Meanwhile, their auto loan and credit card payments have been 100% on time for five years, and their verified income easily covers the rent.
The Investor Take: Low risk. Life happens, telecom billing disputes are common, and their core financial obligations are handled responsibly.
Scenario B: The Maxed-Out Credit Cards
An applicant with a 710 score carries $35,000 in credit card debt across four cards, all hovering at 95% of their credit limits. They make minimum monthly payments on time, keeping their score looking decent on paper.
The Investor Take: Massive red flag. High-interest debt consumes cash flow. If they face an unexpected emergency, debt-servicing costs will take priority over rent.
The Investor's Bottom Line
Screening tenants is an essential business practice, but it requires balancing risk management with provincial human rights compliance. Always require original, complete bureau reports, evaluate overall financial patterns rather than isolated errors, and apply your criteria consistently to every applicant.