Does Checking My Credit Score Lower It in Canada?

When it comes to managing your financial health, understanding your credit score is crucial. Many people wonder if checking their credit score might negatively impact it. In Canada, this is a common concern, and it’s important to distinguish between different types of credit inquiries to understand their effects on your credit score.

Types of Credit Inquiries

Credit inquiries are categorized into two main types: soft inquiries and hard inquiries. Each type has different implications for your credit score.

Soft Inquiries

A soft inquiry occurs when you check your own credit report or when a lender or company checks your credit as part of a background check or pre-approval process. These inquiries do not affect your credit score. Checking your credit score through a service or monitoring tool falls under a soft inquiry. Here are some common scenarios where soft inquiries occur:

• Self-Checks: When you check your own credit report to monitor your financial health or to prepare for a loan application.
• Pre-Approval Offers: When a lender checks your credit to determine if you qualify for pre-approval offers without affecting your score.
• Employment Background Checks: When an employer checks your credit report as part of their hiring process.

Hard Inquiries

A hard inquiry happens when a lender or creditor checks your credit report as part of a decision-making process for a credit application. This type of inquiry can impact your credit score. Examples of hard inquiries include:

• Applying for a New Credit Card: When you apply for a new credit card, the credit card issuer will perform a hard inquiry to assess your creditworthiness.
• Applying for a Loan: When you apply for a mortgage or car loan, the lender will conduct a hard inquiry.
• Applying for a Credit Increase: Requesting an increase in your credit limit can sometimes trigger a hard inquiry.

Does Checking Your Own Credit Score Affect Your Credit?

No, checking your own credit score does not lower it. This is because it is classified as a soft inquiry, which does not impact your credit score. In Canada, you are encouraged to check your credit report regularly to ensure accuracy and to monitor for signs of identity theft.

How to Check Your Credit Score in Canada

In Canada, you have the right to request a free copy of your credit report from the two major credit bureaus, Equifax and TransUnion. Here’s how you can check your credit score:

1. Online: Both Equifax and TransUnion offer online services where you can access your credit report and score. You may need to verify your identity to access the full details.

2. By Mail: You can request a copy of your credit report by mail. You will need to complete a request form and provide identification.

3. Through a Credit Monitoring Service: Various credit monitoring services offer access to your credit report and score, often including additional features like alerts for changes in your credit profile.

The Importance of Monitoring Your Credit

Regularly checking your credit score is a good practice for several reasons:

• Detect Errors: Regular checks help you identify and correct any errors or inaccuracies on your credit report.
• Monitor for Fraud: Keeping an eye on your credit report can help you detect signs of identity theft early.
• Prepare for Major Financial Decisions: Knowing your credit score helps you prepare for applications for loans or credit cards.

What to Do If You Find Errors on Your Credit Report

If you spot any errors or discrepancies on your credit report, it’s important to address them promptly. Here’s how you can correct errors:

1. Contact the Credit Bureau: Reach out to Equifax or TransUnion to dispute the error. Provide any supporting documentation to back up your claim.

2. Provide Evidence: Include copies of documents that support your dispute, such as statements or letters.

3. Follow Up: Monitor the resolution of your dispute and ensure that corrections are made to your credit report.

Tips for Maintaining a Healthy Credit Score

To maintain a good credit score, consider the following tips:

• Pay Your Bills on Time: Late payments can negatively impact your credit score.
• Keep Credit Utilization Low: Try to use less than 30% of your available credit limit.
• Avoid Opening Too Many Accounts at Once: Multiple hard inquiries in a short period can hurt your credit score.
• Review Your Credit Report Regularly: Stay informed about your credit status and take action if needed.

Conclusion

In summary, checking your credit score in Canada through a soft inquiry will not negatively affect your credit score. Regularly monitoring your credit is a proactive step in managing your financial health. By understanding the types of inquiries and maintaining good credit habits, you can ensure that your credit score remains healthy and robust.