Someone performing a credit check

5 people checking your credit

Your credit score is a part of your credit report and it’s an important part of your financial life—some may even say it’s your financial lifeline. A credit report is a history of your applications, payments, and outstanding balances. A credit score is a numerical value between 300 and 900 that determines your credit worthiness at any given point.

Every time you ask for credit—from setting up hydro at your home to leasing a car—the lender will check your credit report and score with one of the two Canadian credit bureaus (Equifax and TransUnion). Having good credit is a deciding factor when lenders choose to approve or decline an application.

According to Equifax, Canadians should only apply for credit when they absolutely need it. “Too many inquiries in a short period of time can sometimes be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties, or overextending yourself by taking on more debt than you can actually repay. A flurry of inquiries will prompt most lenders to ask you why.”

These are individuals or groups who will check your credit:

Your landlord

When you want to rent a home, condo, apartment or other dwelling your landlord will ask for a variety of information including confirmation of employment, a recent paystub to verify income and permission to perform a credit check. They check your credit report because they want to see your history of making payments on time—or lack thereof.

A potential employer

Although not all employers require a credit check for employees, some professions—such as banking—do. Financial woes and a low credit score can be a red flag for potential employers. Money mismanagement may increase the changes of employees committing fraud when they work in an industry that deals with money.

Cell phone company

Although it may not seem like you’re applying for credit when activating a cell phone, you are. Utilities such as cable, hydro, and cell phones are billed after the fact—after you’ve used the service. Therefore, the utility company that is providing the service on a month-to-month credit in return for payment upon invoice. These companies will check your credit before activating the service.

Car dealership

If you’re in the market for a new vehicle, the car dealership will perform a credit check before driving off the lot—unless you're paying in full with cash. When applying to lease or finance the purchase of a new or used car with a car loan the dealership will need to look at your credit report and score.

Banks

When applying for a mortgage, personal loan, or line of credit, the bank (or another financial institution) will check your credit. Along with your income and employment stability, your credit score is a major deciding factor for credit applications.

It’s important to note that everyone who applies for credit needs to consent to the company performing a credit check. Companies are not allowed to make an inquiry with the credit bureaus or request your personal and financial information without your permission.