What Do I Need to Know About My Credit Score in Canada?
29 October 2015
Everyone who’s ever borrowed money to buy a car or a house, or even simply applied for a credit card, has a credit file. In Canada, that’s about 21 million adults. These credit files are summarized with a numerical score that indicates the owner’s creditworthiness. Because of their role in representing consumers’ financial responsibility, these credit scores are important to keep in good standing. Since they're so important you might be asking yourself, what do I need to know about my credit score in Canada? Knowledge is key to best protecting your credit score. Here are a few things you may not have known about your credit score:
You have more than one credit score.
While most people talk about having a “credit score,” everyone actually has several scores assigned to their credit histories. There are various scoring methods that lenders can use to produce a credit rating, and each lender chooses the model that best represents the information they find useful. Some lenders use scores that are weighted according to their industry, while others use blended scores from the two credit reporting agencies in Canada, TransUnion and Equifax. Where there are variances across the board, typically if you have a good credit score with one scoring model, you will have a good score when other models are applied.
Your credit report is available for free annually, but your credit score is not.
You can check your credit report for free once every 12 months for each credit bureau. You can either pull both reports at the same time every year to compare the two, or alternate between each report every six months for more regular monitoring. While you can do this for free, you must pay to view your credit score. Prices can vary depending on which agency you go through.
Checking your own credit report will not hurt your credit score.
Ordering a copy of your own credit file is known as a soft inquiry. Hard inquiries, on the other hand, are triggered when a lender pulls a copy of your report, usually after you apply for credit with them. Hard inquiries can impact your credit scores for up to two years, but your own soft inquiries have no effect on the number.
To keep an eye on your credit files, consider signing up for a credit monitoring service. These services can perform credit checks for you as often as every business day and alert you if they become aware of certain activity that could indicate identity theft.