Equifax, TransUnion, Credit Karma, Borrowell: Should you trust your credit score? (Marketplace)


♪ ♪>>Asha: Do you know
what your credit score is?>>Yes, I do.
>>It’s actually… It’s good.
>>Asha: Do you want to say it?>>No! It’s good! It’s a good credit score. It’s above average.>>Asha: Your credit score. It used to be taboo. Now it’s out in the open. And how did you find it out?>>Credit karma. I use Borrowell, so they
send me a monthly report. Credit Karma and Borrowell.>>Asha: If those names ring a
bell, it’s likely because of commercials like these. Seems our score will
decide our future.>>You know, I’m wondering if
now is the right time for us to have a kid. I’m not sure we’re
ready financially.>>Just check your credit
score for free at borrowell.com.>>Yeah!>>Asha: Lenders and landlords
use scores to help decide how financially risky we are, and
what interest rates to charge. So millions of us are signing up
to learn our three digit number. But are all
scores created equal? And just how reliable are they? Our credit score crew is
about to test that out. Michael Deng. He’s a brand ambassador and
goes by his last name only. Kristal Ramroop, a logistics
manager with two young kids. And Raman Agarwal. Owns his own company
and employs 55 people.>>Asha: Credit score crew. How are you doing?>>Great!
Thank you.>>Asha: Why are you three
interested in your credit scores?>>One should know how
much score they have. If they are borrowing money from
the bank, it is very important to credit score,
play a big role.>>This is something
close to home for me. I mean, I like being
educated on things in life.>>I don’t know my credit score.>>Asha: You’ve never
checked your credit score?>>I’m going in as blind! That’s the game plan.>>Asha: We’re
testing four companies. Two give out a free score. Credit Karma, based in the US. And Borrowell, a
homegrown Canadian company. And we’ll test two that
charge for a credit score. Equifax and TransUnion.>>Asha: Here’s the scoop. The higher your score, the
higher the chances a lender will loan you cash or
give you a credit card. It’s based on many factors,
including whether you pay off bills on time, how much money
you owe, how long you’ve been borrowing, what types of credit
you have and how often you ask for new credit. First up, Credit Karma.>>I got it.
>>Asha: You’re in?>>I got it.
762.>>Asha: 762 is very good
according to Credit Karma.>>Yes, it is.>>Asha: The
karma’s alright with you.>>Yes, it shows my credit cards
here, too, all my credit cards. Everything it shows.>>So, mine’s fair,
Which I expected. I do keep up with it, because I
did file for bankruptcy, so it shows me the information on my
bankruptcy and when it will be discharged and
closed, which is great.>>Asha: Let’s see
what’s going on with Deng. Wow!
What? Can you read out
your score, please?>>811.>>Asha: And it says you are…>>Excellent. I think.
I’m confused. I don’t know. I guess I’m doing
something right.>>Asha: Our testers
don’t just get a score here. Credit Karma
serves up credit cards.>>I’m at 19.97 for a
President’s Choice card. MasterCard.>>Asha: And you?>>Canadian Tire
for a 19.99 percent.>>Asha: And Raman?>>American Express card. It’s called Cobalt Card
at 19.99 percent interest.>>Asha: So, let me
get this straight. You are all being offered the
same interest rate, and you have different credit
scores across the board.>>Correct.>>It’s strange.
>>Asha: Does that make sense?>>Not at all.>>Asha: It says right on the
site, an offer based on your score. Next up in our test,
Borrowell, another free score. There you go. You’re in!>>637. Wow. What did I do?>>Asha: Raman’s stunned. He was just at 762. Now his score has
dropped 125 points. What happened?>>I have no idea. I have absolutely no idea.>>Asha: And look, on the other
credit score, Credit Karma said you were doing very good.>>Correct.
>>Asha: Now, you are…>>It’s showing
I’m below average. I cannot understand this.>>Asha: He’s worried because if
he wanted a loan, his low score could mean a
higher interest rate. Kristal’s score tanks, too. By almost 100 points.>>It’s a huge difference.
It’s shocking actually. Say for example you were on
Credit Karma and you go in with that credit score thinking, you
know, you’re doing pretty well and then you try something
else out and it’s the complete opposite, it’s
kind of deflating.>>Asha: And Deng is
also going downhill.>>I am now an average Ontario
person at 770 apparently.>>Asha: I mean, you’re still
excellent but you’re not as excellent as you were with
Credit Karma, sorry to say.>>Exactly. So I wonder what I did in the
past two minutes to lose it.>>Asha: Check it out. Borrowell recommends credit
cards, and lots of loans, too. And what kind of
interest rates are there?>>Well, it says here, it’s
pretty high, though, Fairstone. I don’t know who they are,
asking for 26.99 percent interest.>>Asha: And while Kristal has
the lowest score, she gets the biggest offers. Loans up to 60 grand. That’s a lot of money.>>It is.>>Asha: Okay, let’s pull out
the plastic for the next two scores. They cost about 20 bucks. Starting with Equifax.>>So you just hit
“view my product now”?>>Asha: Kristal’s
score is back up.>>Yeah, well, I feel like
Equifax, like, you are paying, now you’re paying for a product
that it should be more accurate.>>Asha: Raman’s paid
Equifax score is also up.>>Strange. I’ve got a better
score here now. What the hell they are
showing me a different score?>>Asha: And Deng?
Keeps on sliding.>>It’s about an 80 point
difference from what we started with. So I started off
my day very well. I had, like, 811 and every
little test I did it just went boop, boop, boop.>>Asha: So, what’s in
store for our final score? It’s from TransUnion. Do you think this credit score
will be better or worse than the others?>>Hard to say.>>Asha: Yeah.>>I don’t know.
I’m kind of scared.>>Asha: Oh, wow.
>>Yeah. So mine went into, ah,
very poor on TransUnion.>>Asha: And the
grade score is F.>>Yeah, it’s F.>>Asha: What do
you think about that?>>Disappointing. I mean, it’s gone, we’ve gone
through four different credit sites and I mean
nothing is really consistent.>>Asha: But
Deng’s on the rebound.>>All right, I’m in.>>Asha: Let’s see.>>Back up.
I am at 7…>>Asha: 98! Good stuff, man!>>Get it!>>Asha: This is looking up. Unlike the free sites,
TransUnion and Equifax aren’t pitching credit cards or loans.>>This is more just
a plain information.>>Asha: And Raman? He’s up by two points. So, here are the final results. Three testers,
four companies. Four different credit scores. These roller-coaster results are
making our testers scratch their heads.>>Does every company have
their own formula to it? Or there’s one
standardized one for everything?>>Asha: We’ve shared our
results with the companies in our test. Credit Karma declines to come on
camera and won’t comment on our findings. TransUnion and Equifax won’t
give us an interview either. And Borrowell? Their CEO, Andrew
Graham, is about to step up. [ ♪♪ ]>>It really is a confusing and
frustrating system in many ways. I’m really sympathetic to
that and that’s really why we’ve tried to make it
more transparent. So, what we’ve done is made it
possible for consumers to see that information quickly and for
free so they can advocate for themselves.>>Asha: But Kristal wonders
how she can advocate for herself without knowing
which score lenders use.>>Do they go based on the free
websites that you can access or do they go based on the bigger
guys like TransUnion or Equifax?>>Asha: Good question. Consumers are wondering
what can we trust, then? What score can we trust? Which company is giving
us the clearest picture?>>There are many different
types of credit score in Canada and they’re calculated
slightly differently. Every lender will have their own
secret sauce for how they make loans, and they may use a
different type of score. The score we give out is a
very commonly used score.>>Asha: Same deal with Credit
Karma, Equifax and TransUnion. They say their scores are
used by banks and lenders too. But which ones? They won’t tell us. It’s time for test number two
with our credit score crew. All right. You’re going to take these
credit scores, we’re going to send you off in some
real life situations. I will be coming with you
but hanging back a little. We’ll see what happens. Let’s go. We want Deng to find out
if he can score a set of wheels with his credit scores. Like this Credit Karma
commercial suggests.>>Let me hop in and
get a feel for it.>>Asha: So, he’s meeting
with auto sales manager Ronan Frawley.>>I have always wanted a
high-end car where I can feel the speed underneath my feet.>>Well, you’re in
the right place.>>Yeah. I’m just wondering if these
would do anything for me?>>These are credit scores
you have printed online?>>Yeah, man, these
are the free ones.>>Yeah. Okay. These are good to know for
yourself personally, but really they don’t bear any weight in
terms of an automotive purchase. We’re gonna be looking at many
other variables including credit score. But from an automotive lender’s
perspective, this really wouldn’t have any impact
whatsoever on lending.>>What about the one I
pay for on a monthly basis? Does that do anything for me?>>No, not at all. It’s not worth the paper
it’s printed on unfortunately.>>Oh, man.>>Asha: Turns out the car
people request their own score on you which could be different.>>Nothing like the commercial
I saw online on Credit Karma, swipe and you get a new car. Swipe and new car.>>Yeah.
No, not quite.>>Not quite.>>Asha: So Deng’s scores
don’t pass the test drive. But at least he gets to
take a car out for a spin. Next up, Kristal and
I are in Toronto’s Condotown chatting with property
manager Sabine el-Ghali.>>For your properties when you
go to rent them out would these credit scores be
something you would consider?>>We don’t accept
outside credit reports. Some people would actually
submit these and then I have to tell them I’m sorry
I can’t accept it. Thank you for submitting it. We have to do it ourselves.>>Asha: Listen up. Sabine’s looking for
something specific.>>It gives you a number but I
don’t see it saying a Beacon score anywhere on them.>>Asha: Say what? There’s something
called a Beacon score?>>Sometimes when we run it
it’s even higher than what they presented.>>But not lower?>>We’ve had lower as well.>>Asha: Okay, then. Kristal’s four
scores don’t cut it here. So what’s Raman going to hear
when he shows his scores to mortgage broker, Vince Gaetano? Vince owns monstermortgage.ca.>>Let’s take a look at them. Okay. This is a client score and not
necessarily the same score I would secure when I
pull my credit bureau. This is a general score. As a mortgage professional
I pull a Beacon score. That’s the score our lenders
want us to present to them with the mortgage application.>>Asha: It’s that
Beacon score again. It’s used by most
lenders in Canada. But here’s the catch. It’s only available to
businesses and it’s kept secret from you and me.>>All these scores that are
being provided to consumers free or by paid purposes are not
necessarily Beacon scores.>>Asha: This is
your Marketplace. [ ♪♪ ]>>Asha: Three testers, four
companies, four different credit scores that don’t
seem to mean much.>>Why don’t we come on in?>>Asha: Thanks to this mortgage
broker, Raman’s going to find out his secret Beacon score.>>Why don’t you have a seat?>>Sure.>>Asha: It’s risky because a
business checking up on him could lower his score. But he wants to know,
so he’s going for it.>>So, Raman?
>>Yes.>>I have your score.
>>Okay.>>I can’t show you the score
but your Beacon score is a lot different than any of those four
reports you showed me today.>>Let me ask you, is
it higher or lower?>>It’s extremely higher.>>Oh, my God.>>And you’re in the top ten
to 15 percentile of Canadians. And I have an obligation to
keep the reporting of the credit score private.
>>I see. You can’t disclose
the numbers at all?>>I can disclose the number. Your credit score is 829.>>Oh, my God!>>Asha: Wait.
What? That’s way higher than
all his other scores. We take that news to Borrowell. One of our testers went to a
mortgage broker and had a hard credit score check and
it was a Beacon score. His Beacon score was 829. Borrowell’s score was 637. So the Beacon score is almost
200 points higher than the score he got from your company. Can you explain that?>>There are many different
types of credit score in Canada and they are calculated
slightly differently. It is a complicated system
and we’re the first to say it’s frustrating for consumers. We didn’t build the system. We’re trying to help add
transparency to it and help consumers navigate it.>>Asha: Then maybe he can
help answer this next question. All our testers took their
scores to a car dealership, a mortgage company, along with
a property rental management company. All of them said their
credit scores were useless. They couldn’t use them,
they couldn’t run them. What do you make of that?>>If you talk to any lender,
any bank that’s making lending decisions, they’re
absolutely using credit scores.>>Asha: So, which
credit score are they using?>>There’s a variety of
credit scores in Canada. The credit score we give is a
mainstream credit score used by many of the banks.>>Asha: Mainstream how? If we’re being told it’s
not being used, how is it mainstream?>>It’s absolutely being used.
We’re using it for one. I mean, look, the good news is
if you are doing things like paying your bills on time and
not maxing out your credit cards you’re gonna see improvements
across any kind of credit score you pick. So, I think
that’s the power here. [ ♪♪ ]>>Asha: But who’s
really got the power? Seems like Americans
may have the upper hand. Remember that
secret Beacon score? It’s not a secret in the US. They call it a fico score there
and consumers can get it easily. And remember those offers
coming through the free sites?>>19.97.>>26.99 percent interest.>>Up to 59,995.>>Asha: Borrowell and Credit
Karma get a cut of any offer you are approved for by a loan
company and Vince Gaetano has a lot to say about that.>>The end result is you are
giving them permission to pull your report. And that data is very valuable
to lending companies, to marketers, to anyone that
needs to sell you financing.>>You have many loan companies
out in the marketplace that are offering these types of services
because they want to market to you at the appropriate time when
you’re at your most vulnerable.>>We show his
concerns to Borrowell.>>It really doesn’t
reflect how we run our business. We want to connect people to the
best financial products if and when they need them. Many, many, many people that
use Borrowell have never taken a financial product with us
and that’s totally fine.>>Asha: And get this, if
you can find the fine print on Borrowell’s site, it says their
score may not be the same score used by third parties and is
provided to you for educational use. Bet you missed it in the
Credit Karma commercials, too.>>The score you see on
Credit Karma is provided for educational purposes.>>And may be different than
the score your lender uses. [Laughter]>>I think they should maybe
advertise that a bit more, that it’s not necessarily the same
score that other agencies or people pulling
their score would see.>>Asha: And those TransUnion
and Equifax scores you pay for? They’re also for
educational use.>>What is someone’s
actual credit score? Who knows that?>>It’s hard to fathom that a
company would exist to give you a credit score that may not
be accurate and may not be completely needed. [ ♪♪ ]