Which provinces allow credit checks?
If you live in Ontario or Newfoundland and Labrador, you can breathe easy. It’s against the law for auto insurance companies to use your credit score.
The law could change in Ontario, though. The ruling Progressive Conservative Party announced plans in spring 2019 to allow companies to ask you for your credit score in exchange for a better rate.
That’s already the situation in Nova Scotia, though you can’t be denied insurance if you refuse. And recently, in March 2021, the province's insurance regulator approved a request from RSA Canada to offer dicounts to auto policy applicants on the basis of their credit scores.
In Alberta, insurers have to ask for consent before taking a peek at your credit score, and they’re prohibited from using it if you only want the most basic plan.
In Manitoba and British Columbia, the provincial government regulates the business. Neither Manitoba Public Insurance (MPI) nor the Insurance Corporation of British Columbia (ICBC) list credit scores among their criteria.
It’s the same story for Saskatchewan and its Saskatchewan Government Insurance (SGI). However, while drivers are required to get basic coverage through SGI, you may face a credit check if you want additional coverage through a private company.
Quebec, New Brunswick and Prince Edward Island don’t have rules forbidding the practice, but it’s not common in the two Maritime provinces.
How much do I need to worry?
Since drivers with an A-plus score can get behind the wheel with the best deal, they’re probably pretty happy to hand over their rating and save a few bucks on their premiums.
But what if you’re a young adult, a newcomer to Canada, unemployed or barely getting by? If you haven’t been able to build or preserve a solid score, insurers could hit you with a higher premium, making it more expensive to get to work, school or a doctor’s appointment.
That said, insurance companies look at many other factors when they size you up, including your area, driving experience, accident history and the type of car you drive. (Unfortunately, many insurers also judge you on things like your age and gender.)
We also have a consumer watchdog called the Insurance Bureau of Canada (IBC). It’s published a voluntary code of conduct for credit checks and says 85% of Canada’s personal property and auto insurance companies have signed on. Some of the friendly ground rules include:
- Asking for your consent before checking your credit score.
- Not cancelling or denying insurance when you don’t consent.
- Using other relevant info to calculate your premiums if you don’t have much credit history.
Should I check my credit score before buying insurance?
It’s always a good idea to check your status, even if your credit won’t affect your insurance. After all, your credit score will affect the interest rate you’ll get on a car loan, mortgage or credit card.
If you don’t know your credit score, you can check it online through a number of free online services. Borrowell is particularly handy, as you’ll get monthly updates on your score, tips on how to improve and offers for products that match your credit.
And keep in mind, it’s always worth shopping around to different insurers. Not every company cares about your score and uses it to calculate your premiums, even if your province allows it.