In the past few years, credit scores have been available to regular folk for free in Canada with fintech providers like Borrowell and Credit Karma. Prior to this, you would have to pay for your credit report, or be applying for a loan (for example a car loan or a mortgage) to be able to access your credit score. There are two major credit score companies providing this for free in Canada, and these are Borrowell and Credit Karma. Which one is better? Here’s whether you should sign up to have your credit score regularly monitored with Borrowell vs Credit Karma.
Knowing your credit score is useful because if you are applying for a loan (again, for example, if you are financing a car, getting a mortgage, or applying for a business loan) you will want a good or excellent credit score. If you don’t know what your score is, you won’t know if it is good or excellent unless you pay for the credit report or unless you are applying for a loan. And then it might be too late to improve your score, should you find out that your credit score is not up to snuff.
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Borrowell
Borrowellis a Canadian fintech (or financial technology) company. The Borrowell team is one of the first fintech companies to introduce free credit scores in Canada. Borrowellchanged the gameof credit scores in Canada.
Amazingly, there are over half a million Canadians who have received their credit score for free throughBorrowell(and I am one of them!). That’s a lot of people who know what their credit score is, thanks to Borrowell’s innovation.
Borrowell is not just a random fintech company but in fact, is backed by some big name investors, including David Chilton fromThe Dragon’s Denand of course, The Wealthy Barber (my first ever personal finance book that I read) fame! By the way, David Chilton is agreat follow on Twitter, always funny and humble.
HOW DOES BORROWELL MAKE MONEY?
You might be wondering how the Borrowell company makes any money if they offer a credit score checking service for free.
Traditionally (up until a few years ago at least), it cost money to check your credit score. Borrowell are the first ones who changed this in Canada by offering the ability for Canadians to check their credit score for free.
HowBorrowellmakes money is by providing periodic recommendations to you.
Some of these recommendations Borrowell makes are:
- Credit card recommendations (tailored credit cards that you will have a high likelihood of getting approved for)
- Banking recommendations
- Personalized product offers
If you sign up for their recommendations, then Borrowell receives a commission from this (at no extra costto you). Borrowell makes money through affiliate commissions in a way.
For example, here’s an email I received in my inbox recently, a recommendation for theScotiabank Gold American Express. Although it was tempting to have another $100 Amazon.ca gift card, I had already recently signed up for this and cancelled this card last year, so I didn’t sign up for another credit card.
In addition, the other way that Borrowell makes money is that Borrowell offers a personal loan and they earn a fee on each loan that they provide.
For the Borrowell loan process, looking at theirpersonal loans page, they charge between 5.99% to 29.19% annually- the rate that you get if you decide to borrow from Borrowell is dependent on your credit score. You can borrow up to $35,000 and the minimum is $1000 with the term being 3 or 5 years.
IS BORROWELL LEGIT AND SAFE?
You may wonder how reliable is Borrowell.
Is Borrowell a safe company? Are free credit scores safe?
In this Borrowell review, I always wonder whether fintech is safe. Borrowell states that they use the same level of encryption with your personal information as the big banks to make sure your information stays safe. The reassuring thing is that you don’t have to enter your credit card information or anything to access and receive the free credit score from Borrowell.
Here’s a thread onReddit on Borrowell, and whether the Borrowell company is safe and legit.
BORROWELL CUSTOMER SERVICE
I haven’t had to contact Borrowell with any concerns about my credit score. Although there is noBorrowell customer service phone number, there is a an email: info@borrowell.com and messages are responded to Monday to Friday 9am to 5pm EST.
Borrowell Inc. is based out of Toronto.
BOrrowell Dashboard
Here’s my credit score from 2018:
The interface and Borrowell dashboard is nice to use and easy to read. It shows you your credit score when you log in to Borrowell. Thankfully a few months later my credit score is back up in the Excellent 800’s category!
Borrowell also has a Credit Score Tracker, so you can keep an eye on how your credit score is doing. As you can see in the credit score tracker, my credit score took a big dip after November because I applied for a new credit card at that time (or two).
There’s also a button to check your full credit report from Equifax. You can check how many credit cards you have open and what your mortgage is and even when your credit file was first created!! This is probably my favourite feature of the Borrowell account (for example, the other free credit score checking service, Credit Karma, does not have this feature).
In addition, there are other tools thatBorrowellhas come up with so you can improve your credit score, including a free 7 day email course about how to improve your credit score with one lesson each week.
Source: Borrowell
There’s also a button to check your full credit report from Equifax. You can check how many credit cards you have open and what your mortgage is and even when your credit file was first created!! This is probably my favourite feature of theBorrowellaccount (for example, the other free credit score checking service, Credit Karma, does not have this feature).
Borrowell Refer a Friend
Right now Borrowell has a new bonus (May 2020), Borrowell is offering users a $5 referral if you refer a friend to Borrowell. This is awesome since it’s free to sign up for Borrowell.
You can get a $5 Starbucks or Amazon.ca gift card when your friend successfully signs up.
Now, let’s look at Credit Karma, the other free credit score provider in Canada.
Credit Karma Canada
Credit Karma is a San Fransisco US based company that has been around since 2007 (and there are over 60 million Credit Karma users in the United States), and it recently expanded into Canada. According to a recent statistic in 2019, it is over 85 million now! They have both the US siteCredit Karmaand the Canadian site:Credit Karma.
HOW DOES CREDIT KARMA MAKE MONEY?
Since getting your credit score is free, Credit Karma makes money by being an affiliate. Credit Karma provides some recommendations on credit cards based on your credit scorescore. With these recommendations and advertisem*nts, you can apply for them through the Credit Karma site to no added cost to you, and they will get a commission from your application.
According toInvestopedia, Credit Karma has a complex algorithmic model where they suggest credit products for you based on your credit history, and uses your credit score to figure out which financial products would give you high approval odds. The CEO of Credit Karma values transparency and feels it is a win/win/win situation where you save money on your financial product, the bank gets a new customer, and Credit Karma will make some money too.
If you don’t sign up for a financial product the credit score checking access is still free.
CREDIT KARMA CANADA INTERFACE
Here’s what Credit Karma had in store for me when I logged in- they don’t know that I already have the first card, the Presidents Choice Financial World Elite Mastercard!
The interface is a very clean design and it is easy to use. The colours are soothing!
DOES CREDIT KARMA USE TRANSUNION OR EQUIFAX?
Credit Karma uses Transunion to report the credit scores. If you weren’t aware of this, credit reporting agencies have a different credit bureau of choice. For example, American Express prefers to use Transunion, and CIBC (Canadian Imperial Bank of Commerce) prefers to use the Equifax credit bureau.
Since the different credit reporting agencies use a different credit bureau of choice, the numbers can vary drastically between the two.
My Transunion Canada score tends to be much higher than my Equifax Canada Score (like there’s an over 100 point difference- my Credit Karma score was “EXCELLENT” and myBorrowellscore was just “GOOD”). If you’re confused about this, there’s a post explainingwhy there’s a difference between Equifax and Transunion.
Borrowell vs Credit Karma
Credit Karma uses Transunion to report the Credit Karma credit report. If you weren’t aware of this, credit reporting agencies have a different credit bureau of choice. For example, American Express prefers to use Transunion, and CIBC (Canadian Imperial Bank of Commerce) prefers to use the Equifax credit bureau.
Since the different credit reporting agencies use a different credit bureau of choice, the numbers can vary drastically between the two. My Transunion Canada score tends to be much higher than my Equifax Canada Score (like there’s an over 100 point difference- my Credit Karma score was “EXCELLENT” and myBorrowell score was just “GOOD”).
Related: Transunion vs Equifax: Why the Big Difference Between the Scores?
It was interesting to see the difference between the two scores because one uses TransUnion and the other uses Equifax. Since they are both free to sign up for, I don’t mind signing up for both. The emails are not very bothersome, they don’t come that frequently, and when they do, it is for a new offer (e.g. a new credit card I may qualify for) or an updated score (which I anticipate especially after my credit card churning attempts).
Borrowell has a feature where you can check how many credit cards you have currently open, when they were closed, and when your credit file was first created, and Credit Karma doesn’t. So if you want to check which credit cards you have open, I would sign up for Borrowell.
Here’s a summary of Borrowell vs Credit Karma:
- Credit Karma has more of a minimalist design
- Credit Karma has a blog section with financial tips and advice
- Credit Karma will check your credit score using Transunion
- Borrowell will check your credit score using Equifax Canada
- Credit Karma and Borrowell are both free
- Borrowell has more features, including a 7 day email course on how to improve your credit score, and Molly the credit coach
- Checking your credit score with either Borrowell or Credit Karma won’t lower your score since it is a soft inquiry
So now that I’ve compared Borrowell and Credit Karma with a fine toothed comb, which one is better?
Well, I signed up for both, actually!
I think that since Borrowell and Credit Karma both use different credit bureaus for reporting, it doesn’t hurt to have to options when checking your credit score. Since checking both credit scores are free right now with both companies, it’s a no brainer (to me) to sign up for both. You can always unsubscribe from their promotional emails if you want to reduce your email clutter.
To sign up for Borrowell, click here.
To sign up for Credit Karma, click here.
As mentioned, I use Borrowell more often, probably because they are better at sending me emails on how my credit score is doing.
Alternately, if you would rather check your credit score through your online banking portal, a lot of the big banks also provide free credit score checking:
- CIBC free credit score-CIBC offers free credit score reporting through their partnership with Borrowell
- Scotiabank Free Credit Score-Scotiabank also started offering a free credit score check, and they do this directly with the CreditView Dashboard throughTransUnion. I only noticed this on my banking portal recently.
- RBC’s free credit score– RBC also recently started (August 2017) offering a free credit score check. It is with TransUnion as well through the CreditView Dashboard.
Even though I signed up for both, I prefer Borrowell. Especially now that they have a Borrowell refer a friend program where you can get $5 for referring a friend to check their credit score (for free).
I have bothBorrowelland Credit Karma and I prefer the clean, minimalist design of the Credit Karma site but to be honest, I use Borrowell more. The colours are very soothing indeed.
Do you have a preference for Borrowell or Credit Karma?
When was the last time you checked your credit score?
genymoney
GYM is a 40 something millennial writing about personal finance since 2009 and interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for a free dividend yield spreadsheet and the free Young Money Bootcamp PDF.
