Companies that already offer ways to allow rent payments to be counted within credit scores have welcomed the federal government's plan to make this practice more widespread.

Andrew Graham, CEO of Borrowell, said on Thursday that he is encouraged by the government's commitment.

"We have been saying for two years how important it is for consumers to be able to report rent payments to build their credit history, so I was pleased to see the government take some action."

Prime Minister Justin Trudeau said on Wednesday that there is something fundamentally unfair about paying $2,000 a month in rent, while those who pay the same amount on a mortgage gain equity in their homes and build their credit scores.

He explained that the government wants landlords, banks, and credit bureaus to ensure that rent history is taken into account when recording credit scores, giving first-time young buyers a better chance of getting a mortgage loan at a lower interest rate.

Graham said that open banking, which will allow consumers to securely share their banking data with external financial players like Borrowell, is critical to the success of the program.

"What we have been telling the government, and frankly, anyone who is listening, is that what we really need is open banking."

Zach Kilam, CEO of FrontLobby, which also provides rent reporting to credit bureaus, said he has been working for years to get more adoption.

He added via email: "We welcome all efforts to increase education and awareness of the tremendous benefits that rent reporting can bring."

However, reporting rental income only helps obtain a credit score if it is paid regularly on time. Elizabeth Mulholland, CEO of the charitable organization Prosper Canada, warned that with the sharp rise in rent costs and overall living expenses, many are under pressure and may not benefit; "It's a double-edged sword."

She said it is important for people to control whether they want to share data with credit bureaus.

Mulholland continued: "If you build it only comprehensively, that could be a problem for many low-income and vulnerable people."

"You don't want to leave those people behind. And these challenges increase at the income level for the middle class."

She also said the program should be done in the context of open banking, where there are data protection structures and how it is used.

For its part, the Canadian Bankers Association confirmed in a statement that it is working cooperatively with the government to explore new ways to serve Canadians and will assess the impact of the new policy when details are revealed.

More details about the program are expected in the upcoming federal budget.