Our credit report can play nasty tricks on us, even when you’re a university professor, you pay all your bills ruby on the nail and you had the discipline to fully repay your mortgage.
Stephanie’s experience with Videotron is a clear example. An example that demonstrates to what extent the credit file is a tool that would greatly need to be reformed.
Here is the short story. Dissatisfied with Bell’s offer, the 30-year-old contacted Videotron to obtain a quote. The change of provider involved the acquisition of new devices, namely an Internet terminal at $288 and a TV terminal at $192. Rental is not possible.
Since Videotron finances its customers over two years, a credit check was conducted.
“According to Videotron, my credit rating is not good enough. I have to pay for the devices in full on day 1, because I don’t qualify for the two-year payment,” the professor told me. According to Equifax, its score is 831. That’s not far off the maximum of 900, but it’s not a rating that puts it in the first quintile which starts at 833.
SCREENSHOT
At TransUnion, a score of 832 does not achieve the first quintile in terms of quality.
Stephanie is aware that she does not have “the best possible credit rating” and explains this by the fact that she has paid off her mortgage in full, in addition to having no debt. But in his opinion, this is a good enough credit rating not to represent an excessive risk for Videotron.
It would indeed be quite amazing if a person who enjoys a good salary and who has managed to pay for his house barely has to pay $20 a month for two telecommunications devices.
Stunned by Videotron’s decision and believing it was a mistake, Stéphanie tried to find out what Videotron’s credit score was basing its decision on. “They weren’t able to answer me. They simply replied that they did not see the rating as such, but simply whether the client qualified or not. »
Videotron’s communications department did not want to give details on how the solvency of future customers is assessed. “An analysis of the situation specific to each client is made. As for the detail, you will understand that this is information of a commercial nature,” I was told. In reality, it is difficult to blame Videotron, which has to rely on the financial information at its disposal. The problem, as we can see, is the quality of this information.
At Union des consommateurs, Sophie Roussin, an analyst in personal finance policies and regulations, confirms that not having a mortgage or car loan is detrimental to your credit file.
The agencies’ recipe is “a bit opaque, but we know that the number and variety of claims makes a difference,” she summarizes.
Coincidentally, my credit score at TransUnion (832) is similar to Stephanie’s (831). Like her, I have no mortgages or debts. On the Equifax side, I get 843, which is considered “excellent”. Could I have qualified for interest-free spread payments from Videotron? Mystery.
On the Bell side, the question arises differently because we never finance the purchase of the devices. The TV receiver must be paid for or rented, while the modem-router can only be rented. A credit check is still done with new customers, but it was not possible to know if a minimum score was required.
I don’t know how the decision was ever made to harm people who have the discipline or the financial means to repay their creditors, but this logic must change. Because the credit file is used in all sauces, as I have already written1. It is consulted by employers, insurers, landlords, retailers, alouette.
There are various ways to improve your credit rating… even when you already pay all your accounts on time, you might say. You can indeed use a smaller portion of your available credit, which means – if you can’t reduce your spending – increasing your credit card limit, even if you don’t need it. Or, as Desjardins suggests to its clients, one can “consider opening a new account”. Misery, we are encouraged to claim credit while we denounce the increase in the level of indebtedness of Canadians.
Why not instead reward saving, maintaining cash in your bank account and good financial habits?
It is precisely with this in mind that the Union des consommateurs wants Quebec to imitate France by creating a “nationalized file” without tallying, in which only outstanding payments appear. This bad payer directory does not include the names of consumers who never miss a refund and only lenders have access to it. This is an idea worth considering.
Of course, Stéphanie had the means to pay Videotron all at once for her devices. But his experience demonstrates how misleading a credit score can be by omitting important facts.
How to check your score for free
In Quebec, the Credit Reporting Agents Act (A-8.2) forces credit agencies since 1er February 2021 to give consumers free access to their online credit file.
On the TransUnion site, the path to free access to his file is not easy to find. The large yellow “get your credit score” and “click here” buttons on the home page lead to a form where you will need to enter your credit card number. Of course, we will use it! If, like me, you filled out this form thinking the credit card number was a way to identify you, call the company to dispute the bill and get a refund.
As for Equifax, Google is playing tricks on us. If you search for Equifax, the first result will take you to a page where they only sell the file monitoring service for $24.95 per month. This page does not specify how to consult your file for free if you are from Quebec. To access this information, you have to consult another page that comes a little further in the search results.
A few facts about credit rating
A credit score between 600 and 700 allows you to obtain a mortgage loan from one of the main Canadian financial institutions, according to Manulife. For its part, Scotiabank specifies that you must have a credit score of at least 680 to buy a house.
Having a good job and earning a lot of money does not boost credit score. “You may be rich and famous, but it doesn’t matter. Your occupation and income are not part of the credit scoring formula. Certainly, it is very important for lenders to have a stable job and a good income, but it has nothing to do with your credit report or your credit score,” reports Hardbacon.