COLUMN: Ask the Money Lady – Should I give out my SIN?

Hey there, time traveller!
This article was published 17/03/2021 (1498 days ago), so information in it may no longer be current.

Dear Money Lady, I wanted to know if I should agree to give out my SIN when I apply for a loan. Do I have to? Greg

 

Dear Greg,

Most people never want to share their social insurance number for fear of a hit to their credit bureau, but unfortunately you may find it a necessity when asked by your lender who now need to ensure identity due to increased consumer fraud. If you apply for credit at a bank, open a bank account or finance a vehicle, chances are you will need to disclose your social insurance number, (SIN). Many people still believe that they should never agree to an inquiry or give out their SIN number too many times to obtain credit. They think their credit will either become damaged or their credit bureau rating and score will go down. This is sometimes not true – So to help you out Greg, I’m going to dispel all the myths and also let you know what the banks are looking for.

There are two major credit bureau companies that all financial institutions and merchants use today. They are Equifax and TransCanada Union – agencies that rank and provide an overall score to each person who uses credit. The system for measuring hits to your credit score is indeed intuitive, meaning it measures and evaluates the type of merchant and inquiry. So, it knows if you are shopping around. If you have several inquiries from different banks because you are rate shopping for a mortgage you will usually not see any decline in your score, (however, these inquiries must be contained within a 30-day period). Same thing when you are shopping for a vehicle, multiple hits to your credit bureau from car dealers will not alter the score if contained within 30 days. But, on the other hand, if you are truly shopping and going to different stores, applying for multiple credit cards, personal and retail loans, or buying items on deferred payment plans, then YES, this will drop your score regardless of the 30-day limit.

First and foremost, you want to protect your credit. This is the foundation of all lending and is the only way for lenders to judge your creditworthiness for the future. If you always pay your bills on time and have never declared bankruptcy, chances are you will have good credit. But if you are the opposite, and your credit score is too low, you may find it very difficult to get future credit. Your credit bureau score can range from 300 to 900. As a general guideline, Banks and A-Lenders are looking for clients with scores above 680 and will generally automatically decline applications with scores under 600. Credit card companies are a little more lenient and will go down as low as 530, with auto declines for scores under 500. Here are some tips to improve your credit and maintain a good rating.

 

1. Pay your bills 2-3 days before they are due. Paying them on the due date (especially through online banking) will make you 1-2 days late. This is recorded on your credit bureau and will definitely lower your score without you knowing it.

2. Do not carry balances on credit cards or personal loans month over month. This means your credit is revolving and will automatically drop your score.

3. Resist the urge to have a lot of open credit cards, even if they have zero balances.

4. You must have some credit. If you had previous bad credit and now are just using cash, you are essentially handcuffing your future. Without re-establishing good credit, the banks will decline you every time.

5. Property taxes and support payments in arrears can also drop your score once they are reported.

6. Mortgage and vehicle payments in arrears, once reported (which usually happens after 60 days) are a major hit to your score. Please try to avoid this.

 

I have heard in the past that some merchants or banks do soft hits to your credit. Please do not get fooled by this. There is no such thing as a “soft hit” or a “hard hit” to your credit bureau. If they have your verbal consent, (even if they don’t have your SIN number) when they adjudicate a consumer credit request, they WILL hit your credit and it WILL adjust your score.

 

Good Luck & Best Wishes,

ATML – Christine Ibbotson

 

 

Ask the Money Lady is written by Christine Ibbotson, author of best-selling book “How to Retire Debt Free & Wealthy” and a new book, “Don’t Panic – How to Manage your Finances and Financial Anxieties During and After the Coronavirus”, available at all bookstores across Canada. If you have a money question, please email on the website at www.askthemoneylady.ca.