There was, and still is, a clever way around this that I will tell you about later - but the big news is that you can now get free instant access to your credit score!
Unsurprisingly, there are a few small strings attached - but I think you will find them quite reasonable. I know I did when I decided to get my own score for free a couple of weeks ago.
Before I get into the free scores, I want explain what credit scores are and why you should know yours. But, if you just want get your score ASAP, here you go:
What Are Credit Scores And Credit Reports?
Your credit report or credit file is a detailed history about your money borrowing activity.
Whenever you take out a loan, open a credit card, or even get a cell phone - those companies often report back to one of the two credit bureaus or agencies that operate in Canada: Equifax or TransUnion.
They don’t just report the fact that you borrowed money either, but they continue to report your payment history and outstanding balances on a regular basis. If you miss payments, completely stop paying a loan, or close an account - it’s recorded.
Related: How To Get Out Of Debt Faster
All of that information goes into one big file under your name, address, and sometimes your social insurance number if you gave it to them when you opened your accounts.
Then, when you want some form of new credit, companies will pay Equifax or TransUnion to see your credit history so they can decide how risky of a client you are. If you aren’t risky, they will approve you and give you the lowest rates. If you are a little risky, they will charge your higher rates to compensate. If you are very risky - they simply show you the door.
So if companies can already see all of this - then what is a credit score and why is it needed?
A credit score is simply an estimate of how credit worthy you are represented as a single number. The actual number is calculated using proprietary algorithms created by the credit bureaus. To avoid confusion, in Canada both of them assign scores ranging from 300 on the low end to 900 on the high end.
In short, one easy number allows companies to make quick decisions about approving you for a loan or service without reading your full report.
Why It’s Important To Check Your Credit Regularly
The credit reporting system is far from perfect and ridiculously error prone because:
- It relies on an uncoordinated group of companies that don’t really care to report important financial details about you accurately.
- The system often just roughly identifies you by name and address - making it possible to mix you up with another person both when your credit is checked or updated by a company.
- Studies have been done showing 25% of credit reports contain errors and 5% of them have serious accuracy problems.
- In some cases you can even be confused with someone who has a name that is only slightly similar to your own - that person could even be dead, a criminal, or a terrorist.
With mistakes being so common, checking your score and report regularly is clearly a wise thing to do. If you spot any mistakes, report them to both bureaus immediately so they can correct them.
Even if your report is accurate, knowing your score is still important:
- It is becoming more common for employers to check your credit history when interviewing you for a job. A low score could mean a lost opportunity.
- Some landlords now check credit as well and will reject you if they don’t like what they see.
- If your score and history are bad, you might not be approved for mortgages, lines of credit, car loans, or even TV service or a cell phone.
- If your score is lower, you may be approved but at costly higher interest rates to compensate for the “increased risk”.
Bottom line: keeping your score above 700 is important to qualify for the best rates and to make sure you will qualify for most loans and services.
Getting Your Credit Score For Free
Here are all the ways you can currently get your credit score for free in Canada:
Borrowell is a Canadian company that offers quick access to low interest loans for people primarily looking to pay off high interest and save money. I did a Q&A with them about peer to peer lending last year.
They recently partnered with Equifax Canada to give you free access to your credit score. How it works is they pay the credit score fee for you so you can check your score without cost. They will even give you an updated score every 3 months on an ongoing basis, which is a great bonus.
Why are they doing this?
To get more Canadian eyeballs looking at the services they offer and hopefully becoming future customers. They also get your name and contact information so they can send you financial tips and more details about their products - typically by email.
The good news is you are under no obligation to use any of their products or services, and unsubscribing from their marketing emails can be done with a simple click of the unsubscribe link in any email they send you.
In today’s world where so many companies have your contact information anyway, those feel like pretty small strings to me to always know my credit score. The alternative: pay $16.95 every month to Equifax or TransUnion.
I checked my own score using Borrowell a couple of weeks ago and I found the process to be very quick and their user interface easy to use - much better than Equifax or TransUnion’s own sites.
Mogo is another Canadian online loan provider that also partnered with Equifax a few months ago to offer free credit scores.
Their service appears to work very similar to Borrowell’s, except that I did notice they promise increased monthly updates about your score. They also have an app you can use to check your score and apply for loans.
Their motivation for providing free scores is also the same - the hope that some of those people will take out a loan with them.
Where I’ve had lots of experience with Borrowell and know they are very active in the Canadian personal finance community - I hadn’t heard of Mogo until very recently nor have I had a chance to try their service myself.
3) Free Trial With Equifax
Equifax Canada is known to offer free 30 day trials of their credit monitoring service - but not when you land directly on their site. After 30 days it costs $16.95 and they will bill you automatically every month.
Credit monitoring gives you instant access to both your credit score and credit report online as well as email alerts if anything significant changes with your credit history so you can quickly spot problems, potential fraud, or identity theft.
To get your score for free this way, first you need to find an advertisement or partner offering the free 30 day trial. I found typing the search “equifax free credit score” into Google produces good results as pictured below.
Next, you need to order the Equifax Complete Advantage Plan, which is their credit monitoring product. You will need to provide your credit card number to place your order even though they will not bill you for the first month.
Finally, after you check your score and report, you need to call their customer service line to cancel before your 30 days is up. You may need to wait on hold and they will certainly try to talk you out of cancelling when you call - just stick to your guns and they’ll do it.
I have done a few times myself over the years, and ultimately I was able to get my score and report free every time without being billed. But, I do recommend checking your credit card statement just to be sure.
Getting Your Credit Report For Free
Laws in parts of Canada mandate that you must be given access to your full credit history (without score) once a year if you request it. This allows you to check for errors and omissions in your report and get a good idea of how your credit looks to potential lenders.
As I said before, the score is just an easy number for people to glance at when making credit decisions. You don’t really need your score to know roughly where you stand.
Here’s how you can request your free credit report through Equifax and TransUnion.
It used to be requesting a paper copy of your credit report by snail mail could be done by finding, downloading, filling out and mailing them a practically hidden form on the website of one of the two credit bureaus...
...And why wouldn’t they hide it? After all they are trying to make money by getting you to pay to access your report and score online.
That’s why I was shocked to see that TransUnion has recently made it super easy to get your full credit report (without score) online. They actually call it a more technically correct name - Consumer Disclosure - but it’s the same thing.
You can also still request your report by snail mail.
Equifax hasn’t taken the user friendly approach like TransUnion and still require you to mail them a completed form with 2 pieces of ID to request your credit report by snail mail.
It’s unfortunate because in my experience it seems companies tend to favour Equifax over Transunion for checking consumer credit histories. I recommend requesting your report from both bureaus so you can check for errors and fix any problems.
What’s Your Number?
If you’re comfortable with it, would you share your credit score in an (anonymous) comment? Add a little extra info about the financial decisions you’ve made that might have impacted your score. That way we can get a discussion going on credit scores and learn from each other in the process.
My score was 821 when I checked a couple of weeks ago, which is great. It’s previously been as low as the high 600s though when I had taken out a brand new car loan, opened a few credit cards, and opened accounts with a couple cell phone carriers all within a short period of time. Before that, I was usually in the high 700s.