Obtaining Your Canadian Credit Score

Long time readers will know that I request a free credit report by mail in about June, and pay for my online credit report and score in December of each year.

When I ordered my report and score this past December, I noticed that the sites of both Transunion and Equifax have become… labrynthesque, shall we say. It took me a good while to find the order forms that I was looking for, and I suspect that is because both companies want you to purchase their monthly monitoring option rather than the one time option. The monthly monitoring options were very easy to locate, by the way.

I feel most people would benefit from knowing their score on an annual or semi-annual basis, but would not suggest that the average person would need to know their credit score monthly.

• At Transunion the one-time credit profile and score page can be found here and currently costs $22.90 (down considerably from the $30.85 I paid in 2009!!) Make sure you have the box checked to obtain your score.
• At Equifax the one-time report and score can be found here and currently costs $23.95.

With both companies, you will only have online access to your score and report for one month, so it is a good idea to print out a hardcopy and save the file as a pdf.

Once you begin following your score over time, you can start to notice how your yearly activity affects your score. I rarely have hard-checks performed on my file, and pay my bill in full every month. This conservative use of credit has resulted in my score moving up about 1% per year. My score is quite high (2010 saw me improve to a score of 806 from 799 at Equifax, for example), so I think it takes more to move the needle. Someone with a lower score might see larger percentage increases after a year of good credit.

I am very interested to see my score this year, as I applied for a new credit card after I obtained my credit score… I’m looking forward to seeing where I go in 2011 as a result. I’ll have to wait until December to find out, however.

The following posts may also be of interest:

1. A Primer to Credit Scores and Reports
2. A Walk-through to Obtaining a Free Credit Report
3. Checking Your Report for Errors
4. Understanding Your Credit Report and Score (FCAC Site)

Change Cards… Not Accounts

Banking can sometimes be a lot like baking. Change an ingredient and you change the result.

Sometime ago I changed my bank account to reflect my usage. I changed from a monthly fee to a free, pay per debit charge plan. The side-effect was that the fee on my credit card was no longer waived. The annual fee was less than the total monthly fees on the bank account, but it was still annoying.

I didn’t want to close my credit card account, however, because it had a 12 year history, and removing that would affect my credit score, which is something I want to keep relatively intact.

What I then thought about, and confirmed through a phone call, is that changing cards on the same account keeps the account in tact, so does not affect your score. Doing so keeps the same account active, and the information still flowing to the reporting agencies.

To clarify, your credit card is merely the piece of plastic. Your credit account is broader, and dates back to when you first applied for credit with a particular provider. In my case, I have had 3 credit cards on the same account. The first was a student card, the second was the normal version of the previous card that I switched to after graduation, and now a third card. However, my account is the same 12-year-old account.

You may not be able to switch from, say, a point card to an airmiles card, or a gas point card to a cash-back card (check with your provider), but you should be able to switch to a similarly structured card with the same provider. I switched to a no annual fee card that has the same point system (though it accumulates at a slower rate), so I can still use my points toward my RRSP or TFSA. I also ended up getting half of my last fee credited back to my account. The change also gives me some better travel insurance, and extended warranty of products bought with the card.

When it comes down to it, unless you are putting a lot of purchases on your card to justify the annual fee, you are probably better off with a no-fee card. Calling to change cards on the same account will save you money and leave your credit score untouched.

Mortgage Lenders Not Renewing

A guest writer over on the Million Dollar Journey blog reported that some mortgage lenders are either leaving the Canadian market (hence not renewing mortgages) or are only renewing if certain conditions can be met (based a lot on credit score, it seems).

Worst of all, it seems that borrowers are not being informed until 90 days before renewal.

If you have your mortgage at any of the following, you may want to first read the original post linked above (though it’s a bit of a roller coaster), and then call to see if you will be able to renew:

• Xceed Mortgage Corporation
• Accredited Home Lenders
• HSBC Finance
• GMAC
• GE Money or
• ResMor

No matter what, if you have good credit you won’t have a problem: you just may have to do some running around to have it renewed at a different place.

A Second Credit Card, Part 1.5

As I mentioned in an earlier post (which I consider part 1), I am in the market for a second credit card, and promised to explain why.

Don’t worry. I’m not in any financial trouble; far from it, actually. But we would like to buy a house or condo about 5 years from now.

What does that have to do with a second credit card?  Some time back I read on the Canadian Mortgage Trends blog that beyond having a good credit score, “lenders often want to see a minimum of 1-2 years of satisfactory payment history and at least two trade lines.”

Depending on which company is used, I have either a 799 or an 839 credit score, both of which are well above national averages. Still, the fact that my credit history is mostly made up of my 12-year-old credit card, a couple of inactive department store cards, and two student loans I paid off 3 years ago, it got me thinking.

Armed with print-outs of a recent credit score and report, I met with a mortgage specialist at my bank when I was in Canada last December, just to talk hypothetically. He said that based on my score and a look at my history, he would give me a mortgage at prime, but said/hinted that, yes, having a second active credit card would help, and maybe give me some more bargaining power if it had some history to it.

Since any mortgage is 5 years or so down the road, it seems like the best time to add a new card to my portfolio. First, it will give some history to the card. Second, it will take care of the second trade line. And third, by getting the card now, the effect of a lower credit score (which will happen as soon as I apply for new credit) will be made moot by the fact that it will be a five-year-old card by the time I look for a mortgage.

The only problem? In my search for my second card, I’m finding myself being very very picky. It  just may take me 5 years to select the one I want.

When Pre-Approved Credit is Good

Last night I called Visa about a few things. One of those things was to ask for a credit increase.

I don’t need a credit increase really, as I only use my credit card when I am back in Canada, but my current plan is take a temporary hit on my credit score in order to have a stellar report 4 or 5 years from now when we are  in the market to buy a place.

When I am back in Canada, I use my card for about 90% of my purchases. This results in using about 50% of my available credit. Having a high ratio (amount charged to amount available) is a bad thing for your score, so I wanted to increase my limit, so that when I travel the same purchases will only be about 30% of available credit.

The chap I was talking to said that I have a pre-approved credit increase available on my account. It was less than I was asking for, but by going this route I have achieved nearly the same effect without affecting my score.

The reason, as I was assured by the rep, is that pre-approved increases on existing accounts have no bearing on your score because it is a completely internal review; there is no inquiry into your entire credit report. It is completely based on your account history and the assets you hold with the bank.

Let’s be clear here. I am not talking about getting a piece of junk mail for a pre-approved card. That will affect your score if you apply, as it would be a new account. I am talking about a pre-approved increase on an existing card.

My next question for the lad was why I didn’t know about it. I have electronic statements, so shouldn’t I have gotten the offer by email? Not necessarily, he said. Some times the pre-approved increases are on the account, but are only mentioned if the customer happens to call.

It was nice to know that the companies aren’t always soliciting for more credit, but that there are instances where they will work with you if there is communication. That was a little reassuring.