How To Check And Monitor Your Credit In Canada For Free

This guide explains how to monitor your credit score each month for free without damaging your credit, and how to understand and interpret what's on your credit report.

So How Do You Get A Free Monthly Credit Report In Canada?

Checking your credit score is easier than you think. You can now review our score for free from agencies like Borrowell. Borrowell's free credit score service also sends you monthly updates so you can track your score and keep an eye out for changes.

With Borrowell, all you need to do is fill in a quick online form and provide them with some information about yourself so they can verify your identity and provide you with your free credit score. Don't worry - Borrowell says your data is safe with them.

Why Should You Monitor Your Credit Score?

It doesn't matter if your credit score is good or bad - you should be aware of what it is. Just as you should go to the doctor to perform regular health checks, it's a good idea to check your credit score regularly to know where you stand.

Since your credit score is like your financial report card, you should know how to do this so that you can take action to improve your credit score when it doesn't go so well.

Make Sure You Improve Or Maintain Your Credit Score

If your credit score is pretty good now, it's not time to sit back and rejoice! Make sure you can maintain your good credit score - by doing things like keeping your utilization rate low, paying your bills on time, and consolidating your debt if you have any.

Your utilization rate depends on how much available credit you use. This is important because your utilization rate contributes to 30% of your total credit score. If your credit card limit is $5000 and your credit card balance is $2500, your utilization rate is 50%. This may not be the worst, but it is not the best utilization ratio. In the eyes of your credit bureau, you should aim for a utilization rate of less than 70%.

Watch Out For Unexpected Changes In Your Score

Little fluctuations in your score are typically a reflection of your spending habits, but sometimes it could be a sign of something more sinister. If your credit score suddenly declines, ask yourself if there could be a legitimate reason why this could happen.

You may have just opened a new line of credit or applied for a new mortgage. Your potential lenders would have done a tough credit check at your bureau, which can make a small difference to your credit score if you applied to multiple institutions. Soft credit checks do not affect your credit score - so things like checking your credit score should not affect your score.

Unpredicted changes in your score could be a simple sign of identity fraud. Large-scale security breaches are becoming more common. Take the recent cases that have happened to companies like Uber, Adidas, and BMO, for example. The threat of identity fraud is very closer than you think.

What do identity thieves do with your personal information? You can open new accounts, borrow money without paying it back, or copy your debit and credit cards to withdraw money from your bank account. By regularly monitoring your credit score, you can take action as soon as you notice an unexpected drop in your score before it is too late.

You Are In The Process Of Applying For A New Loan Or Credit Line

Imagine that you have been dreaming of your ideal home for years and working hard to buy it. Now you have saved enough money and are looking forward to the next big chapter of your life. You already have a house in mind, and you and your partner have been talking for months about when you should apply for a mortgage. After all, you are applying for one - to your surprise, your credit score is not as you had imagined. If your score is lower than you expected, your plans to buy a house may be jettisoned as you do not qualify for the mortgage you have planned.

Don't put up with it! Make sure you are always aware of your score so you can make more informed decisions about important financial decisions in your life.

You Can Qualify For Better Credit Cards

Improving your credit score also improves your chances of being accepted for credit cards with better interest rates, perks, and rewards. Depending on your credit card provider, you may be able to use your improved credit score as a bargaining chip for lowering your credit card interest rates.

What Is The Difference Between A Credit Report Vs Credit Score?

What Is A Credit Report?

Your credit report contains your financial history, which includes payments, accounts, balances, credit requests from potential lenders, landlords, and employers, and other personal information. If you ever had a bank account or credit card, you have a financial history.

What Is A Credit Score?

Your credit score is actually your adult report card - more specifically, your financial report card. It's a number that tells your potential creditors such as landlords, lenders, and employers how good you are with money. The good news is, like the dreaded report card from your school days, you can improve it by working to improve your financial health.

Your credit score is calculated using your credit report using complex algorithms that use the information in your credit report. In Canada, there are three major credit reporting agencies: Equifax, TransUnion, and Experian. The three major credit reporting agencies use their own formulas to calculate your credit score, so your credit score may differ slightly from agency to agency.