“The FICO Score has been a critical part of the lending process in Canada for nearly 30 years,” said FICO Canada’s Kevin Deveau in a press release. So we dug a little deeper to see what this change means for consumers.
The short answer is, it means very little. It’s essentially a brand name change. The scoring model is the same for the prior Beacon 9.0 score as it is for the “new” FICO Score 8.
But here’s an interesting nugget that turned up in our research.
“There are many different credit score models used by lenders and available to consumers in the market,” says Equifax Canada’s Director of Communications and Research, Tom Carroll.
That’s a key point because those free credit score providers, like Borrowell, Mogo, etc., have a slightly different credit score than other providers. And in some cases it’s better.
“The score available to consumers through partners such as Mogo and Borrowell is a different version of the Equifax Risk Score™ than the one available to subscribers of services directly from Equifax Canada,” Carroll said. “The credit scores use slightly different models for weighing credit score factors.”
“Generally speaking, the [ERS] score available through Equifax.ca does not take into account mortgage account information, while the version available through our partners, Mogo and Borrowell, does include mortgage account information in the calculation,” he added.
So given that mortgage lenders typically use scores that incorporate mortgage repayment history, it appears those wanting to check their score before applying for a mortgage may be better off using a free credit score provider, like those above. At the very least, they’ll save the $19.95 a month that Equifax charges (albeit, Equifax does provide other features for that price, like identity restoration and ID theft insurance…if you want that stuff).
One other thing to keep in mind: the formula used to calculate free credit scores is not exactly the same as the formula most lenders use. For one thing, lenders and mortgage brokers typically incorporate your repayment history with telephone companies. So if you’re late on your cell bill, a free credit score could be deceivingly high.