When borrowing money from your bank or credit union, is it important for you to get the best possible interest rate? If you have excellent credit, you’re well positioned to do just that.
Not only do lenders offer their best rates to their top clients, having a strong credit score can make life easier when you are trying to rent an apartment, or if you’re purchasing insurance.
If your credit history is poor, or you have no credit history at all, there are ways you can improve it. In this article, I’ll show you how to do that, and I’ll also show you how to obtain a FREE copy of your credit report.
Staying on top of your credit information will help you establish or rebuild your credit. You’ll see where your score needs improvement, which will allow you to make efforts to boost your creditworthiness.
I recommend that you check your credit reports at least once a year.
How To Get Your Credit Report For Free
You can order a free credit report from both companies, but they certainly don’t make it easy.
In fact, when you visit their respective websites, the first thing you’ll notice is the paid version, which offers comprehensive credit reporting for $19.95/mth.
To receive a free report, you must print and fill out a form that’s located on their website, and then mail or fax it to Equifax, along with copies of your identification.
Unlike Equifax, TransUnion does allow you to access your free report online. However, with both Equifax and TransUnion, you can only receive the free version once per year.
Federal legislation requires both companies to give consumers free access to this information once per year, so they are simply satisfying a minimum requirement.
A Better Way To Obtain Your Free Credit Report and Score
Thankfully, in 2019, there are better ways to obtain your full credit score AND report without paying a dime.
Because of this, I no longer recommend getting your credit report directly from either of the bureaus, and I’ve included what I consider to be better options below.
That said, if you do choose to access your credit information from Equifax or TransUnion, I created this pdf, which gives you all of the contact info and request forms you’ll need to receive your report.
This will save you from having to search for the information on their respective websites.
A Free Credit Score from Borrowell
Borrowell is the company I use to receive my free Equifax credit score and report. They send me a link via email, where I can access my full Equifax credit bureau every month.
Not only does Borrowell send me my updated score and report, they also provide suggestions on where I can make changes to improve my score.
It only takes a couple of minutes to register, and you’re on your way. In fact, you can sign up today here.
A Free Credit Score from Credit Karma
Credit Karma is another company that will provide you with access to a free credit score and report, similar to Borrowell.
Credit Karma supplies you with your official TransUnion report, rather than Equifax.
Credit Karma makes it easy for you to stay on top of your credit score, and both provide educational tools to help you manage your credit.
Equifax Vs. TransUnion
With there being two major credit bureaus in Canada, you may be wondering which one you should be using. Most lenders report your information to both companies, but some only deal with one or the other.
Because both bureaus use their own proprietary algorithm to determine your credit score, your score may differ slightly with each.
That said, the difference should be very slight, and isn’t something to worry about. The most important thing is that you’re checking at least one of the two, but since you can both for free, that’s what I recommend.
How to Calculate Your Free Credit Score
It is possible to calculate your own credit score, for free, and I’ve included a link below that will allow you to do that.
However, because it’s so easy to get a free credit score and report these days, it really is a hassle to do the work yourself. Not only that, but it isn’t an official report, only an estimate.
I’ll start by explaining the following credit score estimator, and then provide you with the option I recommend for obtaining your free credit report.
Credit Score Estimator
If you want to get an idea of where you stand, you could begin by filling out this credit score estimator. It takes a few minutes to fill in the fields, but the calculator will tell you what range your credit score will likely fall into.
This will provide you with a starting point for improving your finances.
For example, if you are considered to have “Fair” credit, you can set a goal to improve into the “Good” category. From there, you can work towards an “Excellent” credit score.
The calculator isn’t perfect since the exact scoring algorithm is proprietary. In other words, it’s not a perfect match to the algorithm used by Canada’s two primary credit bureaus, Equifax and TransUnion.
In fairness, I found this calculator to be quite accurate when I compared the results with my own official credit information.
If you’re planning on applying for credit in the near future, I would bypass the calculator, and obtain your official Equifax or TransUnion credit report.
How To Improve Your Credit Score
Once you have received your free credit report, the next step is to find ways to improve your Canadian credit score.
There are many ways to make improvements, but the single most important is to pay your bills on time.
If you have a history of making late payments, it will give any lender reason for pause, and reduce your chances of approval.
Here are some other things to consider:
- If you have unpaid collections, settle them as quickly as possible. Banks will refuse to lend money to anyone who has outstanding items on collection.
- Maintain a variety of credit products. It actually helps if you have experience paying off different types of credit ie. credit cards, loans, or a mortgage.
- Don’t max out your credit cards. High usage of revolving credit products is seen as a negative, and will lower your score.
- Don’t have too many credit products. Only apply for credit that you need, and if it’s no longer being used, close it.
- Don’t apply for credit too often. Every time you apply, an inquiry is recorded on your bureau, which reduces your score ever so slightly.
- Let time do its thing. Building credit takes time. The longer you’re in the game, the stronger your credit history will be.
Staying on top of your credit is crucial to your financial health. The good news is that these days, it’s easy to obtain both your credit score and report for free.
When you receive your credit report, use it as a guide to help you make better choices, and then track your progress.
It’s a great way to not only save money, but also maintain your good credit.