If you think your financial house is in order, but you haven’t bothered to get your credit report in the last few years, then you’re lying to yourself. You’re being irresponsible and playing a dangerous game of chance. This is true whether you’re a Canadian or an American.
If you’ve never bothered to get your credit report, don’t worry. Actually, keep worrying. You can stop worrying after you rectify the situation. You need to get a credit report from each of Canada’s credit reporting agencies (Equifax and TransUnion). For Americans, there’s a third credit reporting agency called Experian.
If you get your credit reports and review them on an annual basis, you can:
- reduce the chances that your identity will be stolen or the impact in the event that it is
- correct errors that may adversely impact your credit score and credit worthiness
- mitigate the chances of legitimate mistakes, like a creditor trying to seize your assets because you share the same name as somebody else
Checking your credit report isn’t a fool proof way to prevent any of these problems. But it’s a proactive starting point and, if you find an error, you can initiate the process to correct it.
Here’s why you shouldn’t procrastinate about getting your report: it’s easy and cheap. Actually, it can be even better than cheap: this article provides instructions on how to get your credit reports for free.
By the way, this article is actually a “Step to Personal Finance Success”. I’m just not explicitly numbering them at this point. When I’ve generated enough “Steps” to form a useful list, I think I’ll compile a free eBook. I really need to write about the vital importance of disability insurance (and the futility of critical illness insurance). I also need to heavily revise Step Two, which was about term life insurance, to reflect the input of Glenn Cooke.
Alright, so I’ve convinced you. You’re going to get your free credit reports. You’d rather not pay for the privilege of reviewing your own information.
In America, it’s easy. You can get your credit report from any or all of the three agencies once a year, just go to this website. Not only can you order it online, but you can typically view it online! American readers: you can skip the rest of this article. Congrats on winning the lottery of citizenship.
But in Canuckistan, we drink milk from bags. We also let foxes write the legislation that protects hen-houses. So our consumer rights are relatively pathetic. Here’s how you can get your free report from each of Canada’s two agencies:
You can request your free copy once a year:
I highly recommend TransUnion’s automated phone system for getting your free credit report. It’s very easy — so long as you can answer multiple choice questions about your banking and credit card details to verify your identity (pro-tip: make sure you have your wallet with all of your cards in front of you when you call). I think that you also need to be living at the most recent address they have on your record. It took me under ten minutes and I got my consumer disclosure in the mail just a week later.
The process for Equifax is relatively onerous. I’d argue it’s so prohibitively challenging that it’s not in the spirit of the relevant disclosure law (PIPEDA). But, then again, I’m actually made of cups.
You need to fill out this simple one-page form and mail it in. Easy. Except for Equifax’s ridiculous verification requirements (and yes, they present the requirements not in a list but in blobby text):
“You must provide [photo]copies of 2 pieces of government-issued identification (such as a driver’s license, health card, birth certificate or passport). If neither piece of government-issued identification shows your current home address, you must also submit a copy of an additional document that shows your address (such as a recent telephone or utilities bill, or a bank or credit card statement). You may black out transaction details on a bill or statement, as long the copy clearly shows the date of the document, the sender, your name and address, and your account number.”
Sadly, when you get your free credit report from Equifax or TransUnion, it won’t include a credit score. In Canada, there’s no free method for checking your credit score, whether you’re an individual or a business — at least not that I’m aware of (please do share any!). Luckily, you probably don’t need your credit score unless you’re looking to borrow money. The only good reason to borrow money is a mortgage. In Canada’s housing bubble you shouldn’t be looking to fasten that noose around your neck anyway.
If you still insist on finding out your credit score, I recommend Equifax. Why? Based on my experience in the banking industry, the Equifax score really is the market standard for individuals. While I worked for one institution that pulled from TransUnion, it was definitely in the minority. Your Equifax and TransUnion scores are probably different, so pick the most useful one.
The reason you should take the time and trouble to pull your free credit reports today was summed up by Ben Franklin a quarter millennium ago (a hundred years before the first consumer credit reporter came into existence):
“An ounce of prevention is worth a pound of cure.”