Want to hear some myths?

• Duck quacks don't echo
• Carrots improve your eyesight
• Checking your credit score lowers it

While it's true that hard inquiries (what banks do when you apply for a loan) can temporarily lower your score, soft inquiries are free and harmless to your score! In this guide, we'll cover:

• How to check your credit score for free
• Factors that influence it (by percentage)
• Hard vs. soft inquiries
• How your credit score affects your loan applications (and one way around it)

Psst — have low credit but still need a loan? If you're a homeowner, Lotly can help. We'll work with you and our nationwide network of 50+ lenders to find a personalized loan that can turn your home equity into cash — at much better rates than a personal loan. Book a free consultation today to learn more!

How to access and check your credit score for free

Let's get one thing clear — you do not have to pay to see your credit score. It is free through several means, some of which we'll get into now. Here’s a detailed guide to help you access your credit score and monitor your financial health:

1. Online through credit bureaus

• Equifax:
  You can access your free Equifax credit report online, updated monthly. Visit Equifax Canada to sign up and check your report.
• TransUnion:
  TransUnion also offers online access to your credit report, updated monthly. Visit TransUnion Canada to register for their credit monitoring services.

We’d recommend this method as it will be the easiest and fastest.

2. By mail or phone

• Equifax:
  To request your credit report by mail, complete a form available on their website and include copies of two valid pieces of ID.
• TransUnion:
  Like Equifax, you can request your credit report by mail or phone. For mail, fill out this form.

To request your report by phone:

• Equifax Canada: 1-800-465-7166
• TransUnion Canada: 1-800-663-9980

For identity confirmation purposes, you may need to provide your SIN (Social Insurance Number) and a credit card number.

3. Through financial institutions

Many Canadian banks offer credit score monitoring services as part of their online banking platforms:

• TD Bank:
  TD customers can check their credit scores for free using the TD app, which provides access to the TransUnion CreditView Dashboard.
• Other banks:
  Other banks, such as RBC and BMO, also provide credit score services through their online platforms or mobile apps. Check with your financial institution to see if this service is available.

This is another simple, easy way to check your score — we’d recommend this method over mail or phone.

4. Via Third-Party Services

• ClearScore:
  ClearScore provides free access to your credit score and report, with data from TransUnion. Sign up at ClearScore Canada.
• Borrowell:
  Borrowell is another platform that offers free credit scores and reports. It’s easy to sign up and start monitoring your credit for free.

FICO vs VantageScore

You may have heard of both of these credit scoring systems, so let's get the facts straight:

• FICO is a US-based credit scoring system created by the Fair Isaac Corporation. This is Canada's most widely used scoring system, with scores ranging from 300 to 850.
• VantageScore was developed by the three major credit bureaus (Equifax, Experian, and TransUnion) as an alternative to FICO. It ranges from 300 to 850, but it's not yet as universally accepted as FICO.

Both scores are calculated using similar criteria (such as payment history, credit utilization, and types of credit accounts), but they may differ slightly due to different algorithms.

Lenders may use different versions of these scores, so your score may vary depending on the scoring model used. However, the general rule is that a higher score indicates better creditworthiness.

Factors that influence your credit score

Various factors can influence your credit score, including:

• Payment history (35%): Making on-time payments is the most crucial factor in determining your credit score. Late or missed payments can negatively impact your score.
• Credit utilization ratio (30%): This is the percentage of available credit you’re currently using. For example, if you have a $10,000 credit limit and are currently using $3,000 of it, your credit utilization ratio is around 30%. A high utilization rate can indicate that you rely heavily on credit and may be viewed negatively by lenders.
• Length of credit history (15%): The longer you have established credit accounts, the better it is for your score.
• Credit mix (10%): Having a mix of different types of credit (such as installment loans, credit cards) can positively impact your score.
• New credit inquiries (10%): Every time you apply for new credit, your credit report receives a hard inquiry. Too many inquiries can lower your score, as they may indicate that you’re taking on too much debt or trying to borrow from different sources.

These factors do not carry equal weight in determining your credit score. Payment history and credit utilization are generally considered the most critical factors.

Hard inquiries vs. soft inquiries

As mentioned above, every time you apply for new credit, it results in a hard inquiry on your credit report. Hard inquiries can lower your score by a few points and stay on your credit report for up to two years.

On the other hand, soft inquiries do not impact your credit score. They are typically generated when you check your credit score, or a lender or company checks your credit for promotional purposes or pre-approved offers. These inquiries do not stay on your credit report.

• Examples of hard inquiries include applying for a credit card, loan, or mortgage.
• Soft inquiries include checking your credit report, pre-approved credit card offers, or background checks by potential employers.

Be mindful of how often you apply for new credit. Hard inquiries can add up and significantly lower your score, so we recommend limiting them and only applying for credit when necessary.

How often should you check your credit score?

Short answer: Between once a month and once a year.

It's a good idea to regularly view your credit score and report to ensure it's accurate and monitor any changes that may affect your creditworthiness.

There is no set frequency for how often you should check your credit score, but we recommend doing it (at the very least) once a year. Equifax and TransUnion will update your credit report monthly, so checking it more than once a month is unnecessary.

Additionally, you should check your score before applying for new credit or making significant financial decisions.

Tips:

• If you suspect fraudulent activity on your account or have recently been denied credit, check your report.
• Remember, checking your own credit score is considered a soft inquiry and will not impact your score. It's better to be proactive and stay informed when applying for credit.
• If you notice any errors or discrepancies on your report, you can dispute them with the credit reporting agency to have them removed.

Regularly monitoring your credit also allows you to spot potential fraudulent activity early on and take necessary steps to protect yourself.

How your credit score affects loan and credit card applications

Having a good credit score is crucial when it comes to applying for loans and credit cards. Lenders use your credit score to assess your creditworthiness and determine the interest rate they will offer you.

• A higher credit score means that lenders see you as less of a risk, making it easier to secure loans or credit cards with favorable terms.
• Conversely, a lower credit score can result in higher interest rates or even a denial of credit.

In addition to affecting the terms of your loan or credit card, your credit score also influences how much you can borrow. A high score may qualify you for larger loan amounts, while a low score can limit your borrowing options.

If you're a homeowner and your credit score has room to improve, but you still need access to cash, Lotly can help. We specialize in finding loans and lines of credit that help you turn your home equity into cash — and at much better rates than personal, unsecured loans (even if you have bad credit!) Get in touch today to see how we can help.

How to improve your credit score

If you have a less-than-perfect credit score, don't worry – there are steps you can take to improve it over time. Here are some tips:

• Pay your bills on time and in full each month. Late or missed payments can significantly lower your credit score.
• Keep your credit utilization ratio low. This is the amount of credit you're using compared to the amount available to you. It's recommended to keep this ratio below 30%.
• Only open new accounts when necessary, and try to keep your number of accounts under control.
• Regularly check your credit report for errors and dispute any discrepancies with the credit reporting agency.
• Avoid closing old credit accounts, as they can positively contribute to the length of your credit history.
• Consider using a credit repair service or seeking guidance from a financial advisor if you need help improving your score. You can also try Koho’s credit rebuilding program.
• Use debt consolidation to pay off high-interest debt and improve your overall credit utilization ratio.
• Be patient. Improving your credit score takes time, so be consistent with good financial habits, and you'll see progress over time.-

By taking these steps, you can gradually improve your credit score and open up more opportunities for favorable loan and credit terms in the future. Be patient and consistent with good credit habits, as it may take some time to see significant improvements in your score.

Lotly can help you get the loans you need, regardless of credit score

Let's quickly recap:

• Checking your credit score doesn't lower it—soft inquiries are harmless. You can check your credit score for free through credit bureaus, financial institutions, or third-party services like ClearScore and Borrowell.
• Payment history and credit utilization are the biggest factors influencing your credit score. They account for 65% of your score, so making on-time payments and keeping credit usage low is key to maintaining good credit.
• Hard inquiries lower your score, while soft inquiries don’t. Limit hard inquiries by applying for credit only when necessary, and regularly monitor your score (at least once a year) to catch errors or fraudulent activity.

If you have a low credit score, it can feel like opportunities have been cut off from you. Loans are expensive, and bills get tougher — we get it.

With Lotly, that doesn't need to be the case. We specialize in helping homeowners access cash through their home equity, even with a low credit score. With the help of our network of over 50 lenders across Canada, you can get the loans and lines of credit you need to fund your projects and financial goals. Contact us today to learn more.

Frequently Asked Questions

Is 700 a good credit score?

According to most credit bureaus, a credit score of 700 is generally considered good, falling in the range of 670-739. This indicates that you are a responsible borrower with a good track record of making on-time payments.

Is a 900 credit score possible?

While having a credit score of 900 is technically possible, it is extremely rare. It would require having a perfect credit history with no missed payments or negative marks on your credit report. Even if you have an excellent credit history, your score may not reach the maximum number — and realistically, it doesn't need to.

How much can I borrow with a 720 credit score?

The amount you can borrow with a 720 credit score will depend on various factors, such as your income, debt-to-income ratio, and the type of loan or line of credit you are applying for. However, having a credit score of 720 generally puts you in a good position to qualify for larger loans and lines of credit with favorable interest rates.

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