What’s The Catch With Free Credit Scores?

What’s The Catch With Free Credit Scores?

Written by Priyanka Correia
Fact-checked by Caitlin Wood
Last Updated August 11, 2021

Your credit score is a 3-digit number between 300 – 900 that lenders use to evaluate your likelihood of making your payments on time. The higher your number the better your chances of being approved for different credit products and services. Given the importance of a credit score, it’s understandable that many Canadians want to keep a close eye on it. Especially when you consider the number of factors that can influence it including your payment history, credit utilization, credit mix, credit length and credit inquires.

What’s The Catch With “Free” Credit Scores

Services offering free credit scores have become increasingly popular over the last few years. While these companies are offering a seemingly great service, there is some skepticism around their product. So, we’re here to find out what’s the catch with these “free” credit score offers. 

Check out the benefits of monitoring your credit score.

Number One

The credit score you receive may not be the same as the one your creditors see. While many of these service providers have partnered up with Equifax or Transunion, the credit score that they provide is based on a particular credit scoring model that is different than the one most creditors use. That being said, it is still quite accurate and can provide you with a good understanding of where your credit stands.

Learn more about how you credit score is calculated.

Number Two

When you sign up for these services, many of the providers will gather and use your data for marketing purposes. One may even say that your privacy is the real price you pay for the “free” service. Moreover, due to the sensitivity of the information, you may find yourself in a vulnerable position if the company were to ever experience a breach in data. 

Find out if you’ve been a victim of identity theft.

Number Three

Some companies that offer a free credit score service usually provide your score for “free” on the basis that you subscribe to their credit monitoring service as well. While you can cancel the service during the trial period to avoid any charges, it can sometimes be a cumbersome process.

So there you have it! Those are the three main catches to these “free” credit score services.

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Priyanka is a personal finance expert at Loans Canada. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives. She has taken financial control of her life by using Mint to budget and track her expenses while growing her wealth by investing through Wealthsimple. She also believes in having an emergency fund, so she keeps a good sum of money in an easily accessible high-interest savings account. She also uses the American Express Cobalt Card to earn points on all her purchases, further fueling her savings goal. She also uses Loans Canada’s lender directory whenever she wants to compare rates from different lenders.

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