Free Credit Score Comes With A Catch

Posted in Credit Repair
Posted by J. Douglas Hoyes, CA, CPA, LIT, CIRP, CBV

Free Credit Score Comes With A Catch

The saying that ‘there is no such thing as a free lunch’ is a truism all consumers should consider whenever they are offered something for free. This especially holds true for the recent announcement by cutting edge lender Borrowell - who are now offering Canadians free access to their Equifax credit score.

While you can already get a free copy of your credit report through Equifax and TransUnion, you cannot access your actual credit score without paying for it. Yet Borrowell is offering Canadians the ability to view their Equifax credit score every three months, if they sign up through their website.

So what’s the catch?

Before you can access your free credit score, you have to provide fairly substantial personal information to Borrowell, including your annual income and personal financial goals. Based on this information they will send you offers for further financial products that ‘match your profile’. In fact , their own terms of service state:

In connection with your use of the Website or Services, we may send you marketing offers about third party financial products or services that may be of interest to you (“Third Party Offers”).

This means that Borrowell will also have access to your credit score. Up until now, Borrowell would only have the ability to view your credit score if you applied for a loan. Again, from their own terms of service:

If you apply for a loan using our Website, you will be asked to provide consent to Borrowell obtaining a credit score or report from a credit reporting agency. By providing such consent, you consent to Borrowell Inc. and any of its service providers, affiliates (including Borrowell Fund Inc.) or agents obtaining and using credit and other personal information about you (including credit reports) from any credit reporting agency, and exchanging information with any of them, on an ongoing basis.

So if you sign up for their free credit score service, be aware that you are also agreeing to these same terms.

What’s in it for Borrowell and Equifax? Sales. By providing access to your credit score, and your financial goals (paying off credit card debt, renewing a mortgage), Borrowell can tailor debt services to you and your risk profile. For instance:

  • If you have a good credit score but carry high credit card debt, you may be pitched a debt consolidation loan. Once housing data is available through another recent partnership between Teranet and Equifax, they will even be able to tell how much equity you have in your home.
  • Have a poor credit score? They will likely offer you higher cost term loans to help you rebuild your credit.
  • Having signed up, Equifax may also encourage you to sign up for monthly credit report monitoring, which adds up to more costs for you - just by signing up for a free teaser.

Now, I’ve got nothing against getting something for free. It’s smart to take advantage of company offers, loyalty programs, points programs and the like. But when you do - be cautious. Be aware that you are providing someone with access to your personal data. Be extra critical of any promotional offers you receive and don’t let the excitement of getting something for free today, cost you more tomorrow.

About J. Douglas Hoyes

Doug is our co-founder and is a Licensed Insolvency Trustee, Consumer Proposal Administrator, certified Insolvency Counsellor and Chartered Professional Accountant.

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