How to rent in Canada with bad credit

Debt can impact more than your bank account. It can affect your relationships, your mental health, and even your ability to find a place to live. Buying a house isn’t an option for everyone. Typically, renting is the alternative, but if you’re dealing with bad credit, you might be wondering if renting an apartment is even possible. It is—but it might take a little extra effort.

Keep reading to understand why credit matters to landlords, how to improve your chances of getting approved, and what to do if your credit is getting in the way of finding a place to live.

Why do landlords check your credit?

When you apply to rent a house or apartment, many landlords will ask to run a credit check. Landlords want to know how risky it is to rent to you. If you’ve had trouble paying bills in the past, they may worry that you’ll struggle to pay rent on time. Evicting a tenant can be a long and costly process, so most landlords look for tenants with a good credit score.

Your credit score is a snapshot of how well you’ve managed your financial responsibilities. It shows whether you’ve made payments on time, how much debt you carry, and how long you’ve had credit. If your score is low, it could raise red flags for potential landlords.

Before you apply for a rental, it’s a good idea to check your credit report. You can get a free copy from Canada’s two main credit bureaus—Equifax and TransUnion—once a year. This helps you spot any errors or surprises before a landlord sees them.

Can you rent with bad credit?

Yes, you can still rent with bad credit. It might be more challenging—but not impossible. Here are some strategies that can improve your chances: 

• Provide rent receipts. Rent payments usually aren’t reported to credit bureaus, so your credit might not reflect your history as a good tenant. Bring your own proof—like rent receipts or bank statements—to show that you’ve consistently paid rent on time, even if you’ve had trouble with other bills.
• Get a landlord reference. Ask your current or previous landlord for a letter of recommendation. A positive reference can go a long way in showing that you’re a responsible tenant, even if your credit score doesn’t reflect it.
• Find a guarantor or co-signer. Having someone you trust with a good credit score to co-sign on your lease could improve your chances. This means they agree to cover the rent if you can’t, so the landlord will get their money regardless of who it comes from. It’s a big responsibility, so make sure you’re confident in your ability to pay—otherwise, your co-signer could be on the hook.
• Show proof of income. Landlords want to know that you can afford the rent. Bring recent pay stubs, a letter from your employer, or proof of other income sources to show that you have the financial means to keep up with payments.
• Offer a bigger deposit. While landlords can’t legally require more than the standard security deposit (usually one month’s rent, depending on your province), you can offer to pay more voluntarily. This can act as a safety net for the landlord if you fail to pay and show that you’re serious about the rental.
• Be honest about your situation. It’s okay to have gone through a tough time. If your credit took a hit due to job loss, illness, or another life event, be upfront about it. Honesty is always appreciated, and some landlords may be more willing to work with you if they understand your story.

What if you still can’t find housing?

Even with all the right steps, bad credit can still make it hard to find a home. If you’re struggling, here are some alternative housing options to consider:

• Look for a private landlord. Large property management companies often have strict credit requirements. Smaller, independent landlords may be more flexible and willing to take personal circumstances into consideration.
• Rent from friends or family. If someone you know has a spare room or basement suite, ask if they’d be open to renting it to you. This can be a great short-term solution while you work on improving your credit.
• Sublet an apartment. Subletting means renting from someone who already holds the lease. In many cases, you won’t need to do a credit check. Just make sure you have a written agreement in place to protect both you and the original tenant.
• Consider short-term rentals. Short-term or vacation rentals can be more expensive, but they don’t usually require a credit check. Some hosts offer discounts for longer stays, which can give you time to rebuild your credit while still having a place to live.
  

How to improve your credit score

If your credit is holding you back, the best long-term solution is to work on improving it. Here’s a few ways to get started:

• Check your credit report regularly to make sure it’s accurate. You can dispute any errors that might be dragging your score down.
• Pay your bills on time and aim to utilize only 30% of your total credit—this is one of the biggest factors in your credit score.
• Catch up on overdue accounts. Even small payments can show that you’re making progress.
• Avoid taking on new debt unless absolutely necessary.
• Consider a secured credit card to help rebuild your credit. This is a credit card that requires an initial deposit.

When debt feels overwhelming

Sometimes, no matter how hard you try, debt can feel like a never-ending cycle. If you’re struggling to keep up with payments and your credit is suffering, it might be time to consider professional debt solutions. A Licensed Insolvency Trustee (LIT) can help you explore options like a consumer proposal or bankruptcy. While these steps can lower your credit score in the short term, they can also give you a fresh start and a path towards long-term financial health.

At Grant Thornton, we’re here to help you understand your options and take control of your financial future. Whether you’re trying to rent with bad credit or looking for a way out of debt, we’re just a phone call away. Book a free consultation to get started.