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Why Do I Get Different Credit Scores from Different Websites in Canada?

Sept. 23, 2021
3 mins
A man and woman look overwhelmed as they calculate their expenses

Have you received a different credit score from a credit monitoring website than you did when applying for a car loan or mortgage? This isn’t just surprising for you: it’s a likely result. Canadians can use several free credit monitoring sites to check their score.

These scores aren’t the same as those used by banks, mortgage lenders, and credit card companies, though.

What are the different credit monitoring companies providing scores to Canadians?

Several free credit monitoring services offer their own credit scores to help consumers monitor their credit use, including Credit Karma, Mogo, and Borrowell. These services can be useful to determine if your credit information is accurate.

Lenders don’t use these scores to determine your creditworthiness, so they are meaningless when it’s time to apply for a credit card or mortgage.

Most credit decisions in Canada are made based on the FICO score created by the Fair Isaac Corporation. This U.S.-based company sells its information and scores to two credit monitoring companies, Equifax and TransUnion. These credit bureaus also use unique calculations to determine your overall score.

More than 90% of Canadian companies that use credit scores to determine loan and creditworthiness use the FICO credit score.

What is the difference between a “soft” and a “hard” credit check?

Checking your credit using an online credit monitoring site is a “soft” credit check. If you preapply for a credit card or loan online, it may also generate a “soft” credit check. These checks won’t impact your credit score.

A “hard” credit check is a formal request for your credit information from FICO (or TransUnion or Equifax’s separate systems). If you need a new credit card, are shopping for a home, or finance a car, it’s considered a “hard” credit check.

You should limit credit inquiries to the ones you need. Multiple “hard” credit inquiries can drop your score because credit companies watch for consumers who may take on a lot of debt or are short on funds.

Tips for managing your credit score

In Canada, lenders aren’t required to share the details of your FICO credit score with you. They can offer general information and make broad recommendations. You’ll get the greatest benefit from making sure the information on your credit report is accurate. Here are practical ways to improve your credit score:

  1. Review your credit report regularly. Leverage online services for easy, immediate access to your credit score.
  2. Correct errors on your credit profile. File a claim with the credit bureau to have them investigate or correct the errors as soon as possible.
  3. Apply for credit only when you need it. Applying for multiple forms of credit in a short amount of time may impact your credit score. However, if you’re mortgage rate shopping, you have a grace period of 30 to 45 days.
  4. Keep balances low. Try to keep your balances below 30% of your limit across all credit cards. Credit utilization accounts for about one-third of your FICO score.
  5. Pay off non-mortgage debt on time. Pay off your credit cards with the highest interest first, and never miss a payment. Payment history makes up the highest-scoring portion of your FICO score.
  6. Consider the impact of closing accounts. Closing a credit card account can shorten your credit history and increase your credit utilization. You may also lose precious points for this.

When you need a credit card or a mortgage, you can have confidence in your application knowing you have a good credit score.

RATESDOTCA Team

The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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