New survey reveals that a majority of Canadians are unaware of the role credit scores play in their lives
October 4, 2016 (Vancouver, BC) – A credit score is the most important ranking consumers will get as adults because a bad credit score can create major road blocks, personally and financially. From landing that dream job, to renting an apartment or getting a mortgage, credit scores can affect key life events that nearly every consumer will face. That said, there is still a lack of understanding amongst Canadians about the role credit scores play in their adult lives.
Mogo Finance Technology Inc. (“Mogo”) (TSX: GO) recently engaged MARU/VCR&C to conduct a nationwide survey to determine if Canadians understand the impact of credit scores and who looks at them. The survey revealed that while 72 per cent of consumers recognize that lenders and financial institutions look at credit scores during the loan application process, most Canadians don’t know who else is looking at their credit score:
- Eighty-one per cent of Canadians don’t realize that an employer may check their credit score when being considered for a job position
- Two-thirds of Canadians don’t know that insurance agencies or cell phone companies might look at credit scores during the application process (67% and 66%, respectively)
- Sixty-one per cent of Canadians don’t know that landlords often look at credit scores as part of a rental application
- More than half (51%) of Canadians don’t know that small business lenders look at credit scores when approving a small business loan
The verdict: a majority of Canadians don’t realize that credit scores can affect different areas of their life and impact important decisions if not monitored. However, credit scores are actually one aspect of a consumer’s financial health that they can fully control and improve with proper management. Consumers can gain control of their finances by recognizing where and when their credit score may be affected to minimize the impact.
Mogo offers the following tips for Canadians to help improve their credit score:
Get checked. Every Canadian with a credit history should know their credit score because a bad credit score could cause not only financial limitations, but also affect how quickly they’ll achieve key milestones in their lifetime.
Take care of late or outstanding payments. Do an inventory and make sure all minimum payments are up to date.
Don’t miss any payments, ever. Missing $4 on a payment is the same as missing $400 in the eyes of the credit score algorithm.
Stay within the limit. Set an imaginary limit of 70 per cent of your approved limit on your credit cards and lines of credit and do not go over it—even if you pay your balance off every month. Doing this will keep your credit score healthy. If you tend to carry a balance on your credit card, try to keep it under 35 per cent of your total credit card limit.
Be aware of who does hard credit checks. It’s in your best interest to be 100 per cent aware of who does hard credit checks to avoid major drops in your score. Multiple hard credit checks in a short time could impact your score because inquiries account for 10 per cent of your overall score. For example, most lenders will do a hard credit check during the loan approval process, and even some new cell phone plans require a hard check. If you’re unsure you should always ask, and request a soft check whenever possible.
The survey also indicated that nearly half (47%) of Canadians don’t know where to check their credit score, and with the millennial segment it’s even more evident since 53 per cent are unaware of where they can get checked.
“Knowing your credit score is a key indicator of your financial health and the first step for multiple life decisions: renting your first apartment, starting your own business, getting a mortgage,” said Chantel Chapman, Credit Score Expert and Financial Fitness Coach for Mogo. “This is especially important for millennials who are currently in that age range where they’ll be facing key milestones that involve a credit score. Monitoring their credit score on an ongoing basis will ensure they stay on top of their credit health so there are no surprises. Also, if you monitor your score and see a significant decrease that can’t be attributed to negative credit behaviour, it could be a sign of potential ID theft which is another reason why monitoring your credit score is so important.”
To help more Canadians get checked and keep them informed about their credit health, Mogo is the first in Canada to give every user instant access to a free credit score from Equifax® with free monthly credit score monitoring through its iOS mobile app or online—with no impact to their credit score. For the first time, consumers have access to a free solution that allows them to monitor their credit score monthly in a sleek dashboard that also delivers key insights about how they rank amongst Canadians and tips to improve their score.
“We’re constantly working to develop innovative solutions so Canadians get more value and utility from their financial services, and we believe that putting consumers first really means giving them the right information so they can get in control of their finances,” said Dave Feller, Founder and CEO of Mogo. “As we launch more digital financial products, we want each product to directly benefit the consumer, and giving them knowledge about their financial health through a free credit score is just the beginning.”
From September 9th to September 12, 2016 an online survey was conducted among 1,548 randomly selected Canadian adults who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 2.5%, 19 times out of 20. The results have been statistically weighted according to education, age, gender and region (and in Quebec, language) Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.
About Mogo Finance Technology Inc.
Mogo (TSX: GO)—a Vancouver-based financial technology company—offers Canadians a more convenient and engaging digital banking experience with its free Mogo®Account. With an account sign-up in under three minutes, users get instant access to three innovative products: a free credit score with free monthly credit score monitoring, a free spending account with no monthly fee, and an instant pre-approval on a personal loan—all with no impact to their credit score. Mogo is quickly becoming the new face of banking as it grows its member base faster than any of the top six banks in Canada. To learn more about Mogo—referred to as the potential “Uber of finance” by CNBC, Toronto Star, and others—visit mogo.ca, or download the mobile app, available now on the Apple Store.
Mogo offers a range of loan products – visit www.mogo.ca for details. Visa® is a registered trademark of Visa Int. Service Association and used under license. Mogo Platinum Prepaid Visa® Cards are owned and issued by Home Trust Company, a TM licensee of Visa Int. and subject to Terms and Conditions. Your MogoCard balance is not insured by the Canada Deposit Insurance Corporation. The MogoCard is only available to MogoAccount holders that have passed identity verification. Apple, App Store and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. Equifax® is a registered trademark of Equifax Canada Co. used here under license. Free credit score is provided by Equifax and is only available to MogoAccount holders that have passed identity verification. The Equifax credit score (ERS 2.0) is based on Equifax’s proprietary model and may not be the same score used by third parties to assess your creditworthiness. The provision of this score to you is intended for your own educational use. Third parties will take into consideration other information in addition to a credit score when evaluating your creditworthiness.
This news release contains "forward-looking statements" within the meaning of applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements regarding Mogo's intention to expand into other products and markets and Mogo's expectations regarding members. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual financial results, performance or achievements to be materially different from the estimated future results, performance or achievements expressed or implied by those forward-looking statements and the forward-looking statements are not guarantees of future performance. Mogo's growth, its ability to invest in its platform and expand into new products and markets and its expectations for its financial performance for 2016 are subject to a number of conditions, many of which are outside of Mogo's control. For a description of the risks associated with Mogo's business please refer to its Annual Information Form dated March 30, 2016, which is available at www.sedar.com. Except as required by law, Mogo disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise.