BMO survey reports 1/2 of Canadians have never checked their credit score - here's how

According to a recent Bank of Montreal report and survey released last week, 56% of Canadians have never checked their credit score.  And, as I’m often asked, one-firth believe that checking their credit can decrease their score (no, it doesn’t - read on to find out why).

Read the Financial Post article outlining BMO report here.

While the regional VP of BMO, Tony Tintinalli shared that “a good credit score is generally considered in the range of 680-720”, the article and report left readers wanting more.  Questions in the comments section of the Financial Post article asked “how do I check my score then?” and “what’s the best way to go about it?”.

Thus, this post on the basics of checking your credit report and obtaining your credit score in Canada.

Where and how do you check your report and score?

There’s two main credit reporting agencies in Canada – Equifax and TransUnion.  For the purposes of this post, I’ll mostly be referring to Equifax, as I’m much more familiar with their reporting and costs.  However, at the minimum you should check both agencies once a year to ensure accuracy.  And although both have proprietary algorithm’s for their credit scoring system, they should be fairly similar in that if you have a good score with one, you should have a good score with the other.  A “great” and “poor” score with either would indicate something is wrong on one or both reports.  And see each of their websites for dispute and resolutions - a  topic for a future post.

What does it cost?

In Canada, you can request a free credit report as often as you’d like.  However, the process can put you at further risk of fraud – see my next point.

Credit monitoring and reporting is a business and if you’d like to receive your report and score now, instantly via the internet, it will cost you $23.95 with Equifax and $16.95 monthly with TransUnion (with creditor monitoring – I couldn’t easily find the option to just buy your report and score on TransUnion’s website).  See www.equifax.ca and www.transunion.ca.

What’s the process?

To request your free credit report, you’ll have to download one from Equifax and/or TransUnion.  With this process however, you’ll have to send very sensitive information via the mail to prove it’s you (you wouldn’t want it to be easy for anyone to obtain your credit report).  We know that things get lost in the mail, and if you choose this route I would highly recommend you send your request via registered mail, which will likely cost as much as simply paying for it online.

If you choose to go online to obtain your report and score, it can be a very difficult process the first time (again, it shouldn’t be easy for a fraudster to get this info), but once you’ve completed these initial steps with Equifax and or TransUnion, it’s as simple as just entering your user name and password in the future.

Please keep in mind that it may be exceedingly tough for you to “get in” with Equifax or Transunion for the first time.  You may be asked questions like, “you had a loan back in 1992 – was it with ABC Financial, Bob’s Financing or none of the above”.   Some questions are so difficult, even you may not be able to remember.  So, for the very first time that you sign up with either company, book a good hour off of your time (and grab a cup of coffee or tea to quell possible and inevitable frustrations) and have some of your accounts handy along with a credit card for payment.  Also extremely important is that you conduct this adventure in the privacy of your home and be totally alone.  If you have to call up Equifax or TransUnion during the sign-up process, they will ask you some very personal and confidential information that you don’t want co-workers or anyone else over hearing.  It's generally a good idea to always be in a private space where no one can overhear you any time you have to contact your financial institution.

What does my score mean?                           

Scores range from 300 – 900, the latter being the best.  But don’t fret if it’s not perfect.  Equifax reports that only 5% of Canadians have a score greater than 850.  According to MyFICO, billionaire Warren Buffet had a credit score of only 718 back in 2008 - click here for the article.

How do I improve my score?

I’ll address this in great detail in a future post or, you can purchase my last book (the ebook is under $4 – see below for the order link) which details every step you need to follow to repair or maintain a great credit score.  Keep in mind that your credit score is fluid and for better or worse, it changes every single month depending on your positive or negative credit habits.

What do the inquiries mean?

You’ll see when you check your credit report “soft and hard inquiries”.  Hard inquiries are listed every time you apply for credit – a cell phone, mortgage or car loan for example.  If you see a creditor listed here that you don’t recognize, that could be a first tip off that identity theft has been (or is being) committed in your name. 

On the “soft” inquiries section, which would include when you’ve checked your own credit, does not affect your score.  You’ll likely recognize a credit card company in your soft inquiries (which you authorized for them to do so when you signed up for your credit card), peaking into to see if you merit a credit increase on your credit card.  Ahh, you might be thinking – that’s why you keep getting credit limit increases from your bank or credit card company.

More information

If you’d like more information on how to obtain your credit report, improve or maintain your score and all things credit, consider ordering my book, A Canadian’s Guide to Money Smart Living published by the Chartered Professional Accountants of Canada for $9.99 or $3.99 as an ebook – click here.

And for more information on avoiding fraud, investment scams and how to protect yourself from identity theft, order my book, Protecting You and Your Money; A Guide to Avoiding Identity Theft and Fraud, also published by CPA Canada and available for the same amounts as the book above – click here.

For more information on any of my books or other resources, visit my website at www.kelleykeehn.com.