Track Your Credit Score
When you order an item online, you usually receive a tracking number for it. We can take that tracking number that identifies our package and searches to see where our package is and the estimated time it will take to go from point A to point B. Some of us are anxious to see where our package is and check the tracking information once or twice a day. We get frustrated when it hasn’t moved and got excited when we see it getting closer and closer to its final destination. While we may not get nearly as anxious or excited tracking our credit score, it’s an important component in receiving a good mortgage.
Credit Reporting Agencies
There are two agencies in Canada that provide a credit bureau and information reports to consumers. Equifax and TransUnion offer Canadians access to their credit reports to help them understand and manage their personal information better. Equifax and TransUnion scores are similar but vary slightly in how they track information. With Equifax, a consumer’s credit accounts are separated into “open” and “closed” categories. For example, a credit card that’s been closed for a few years is going to have a different weight than one that is currently open.
Moreover, Equifax uses an 81-month credit history compared to a traditional 7 years. While TransUnion uses the same information that Equifax uses when scoring a consumer’s credit, they may find certain aspects more important than others. TransUnion offers consumers an extensive report on their employment, which banks could use to verify employment information.
Why Do Scores Differ?
Since the two agencies have access to different pieces of information on consumers, their credit reports will vary slightly. Both agencies use the FICO formula to calculate a consumer’s credit score. Each agency can report different information, therefore the scores will likely not be the same. Errors in a consumer’s credit report are common, which is why it’s good to check with both. TransUnion may have the correct information and Equifax may not, which could result in different results between the two. Consumers should be checking their credit reports regularly so that they can spot inconsistencies between the reports and correct them.
Ways to Check Credit Score
Consumers can choose between going through the credit reporting agency directly, or through a third-party service. When choosing a third-party service, consumers have a number of different options that are free to them.
Mogo and Borrowell are two credit monitoring services that offer consumers free access to their Equifax credit score and report. Every month Mogo and Borrowell update a consumer’s credit score free of charge with no other conditions or fees. This allows users to check their financial health and detect any fraudulent activity. Both services now offer mobile apps to make checking your score even easier!
CreditKarma is a good option for checking your TransUnion score. Similar to Mogo and Borrowell you can review your credit score monthly and track changes over time. Many banks are now providing free monthly access to your TransUnion score through CreditView. Scotiabank offers this as part of their banking service.
Even though tracking your credit score isn’t always exciting, it’s an important factor in determining possible terms for a loan. When wondering how a credit score can impact your borrowing power, visit your local mortgage professional at Centum Home Lenders. You can get in touch with us here.