Enrollments for Self-Credit Monitoring Increase as Canadians Seek New Credit and Look to Manage Debt, Reveals New TransUnion Study

• Nearly half (42%) of surveyed Canadians monitor their credit report to help obtain new credit and 45% look to better manage debt.
• Underserved and new-to-credit consumers benefit from greater credit access by monitoring their credit.
• Consumers looking to improve their credit profile benefit from monitoring their credit regularly.

With the number of Canadian consumers enrolled to monitor their credit with TransUnion^® (NYSE: TRU) showing an 11x increase between 2018 and 2023, a new global study has found that the motivations for consumer credit monitoring are diverse. In Canada, the largest share of surveyed consumers (45%) monitor with the goal of better managing their debt levels and preventing fraud activities, while four in 10 (42%) do so in anticipation of opening a new credit account, and 13% seek to improve their credit profile.

To better understand the distinct profiles, motivations and future outcomes of credit monitoring consumers, TransUnion conducted a global research study examining credit behaviours for millions of consumers in both developed and developing markets – Canada, Brazil, Chile, Colombia, Dominican Republic, Guatemala, Hong Kong, India, Philippines, South Africa, the United Kingdom, and the United States. To further identify how these benefits advance credit education and enable financial inclusion, the study used depersonalized credit data to analyze these outcomes for key consumer credit segments: new-to-credit, underserved, and credit served consumers.

“Consumer credit monitoring has expanded considerably in awareness and usage over the past decade. This expansion has recently been fueled by the impact of the pandemic on consumer finances and the heightened familiarity by consumers of becoming victims of credit fraud,” said Nidhi Verma, co-author of the study and head of international research and consulting at TransUnion. “Our study measures the importance of credit education and quantifies the benefits that credit monitoring consumers experience. These benefits are shown to help lead to better credit profiles, greater access to credit, or an improved ability to pay down debt, depending on the intent of consumers who monitor credit.”

In Canada, 71% of surveyed consumers stated that it is important to monitor their credit, with nearly one fifth (17%) saying it’s extremely important. This finding demonstrated that consumer awareness of credit monitoring is high and is a likely driver behind the surge in monitoring activity in recent years.    

TransUnion surveyed Canadian consumers to understand their initial intent to sign up for credit monitoring services, and the actual benefits they have experienced in doing so. The most common reasons consumers initially signed up for credit monitoring services were that it was free (36%), to improve their credit score (32%), and to monitor their report for accuracy (27%).

Additionally, after using monitoring services for some time, Canadian consumers reported added benefits that credit monitoring has enabled them to achieve: learn how to monitor and manage their credit score (43%), gain visibility to changes on their credit report (37%), detect fraud (30%), and pay down debt (21%).

The study further identified three distinct segments of credit monitoring consumers based on their primary motivation for monitoring their credit. These include Credit Seekers, Credit Managers, and Credit Improvers.

Credit Seekers Benefit from Attaining New Credit

Almost half of the credit monitoring population (42%) is doing so with a goal of attaining new credit. Credit Seekers are consumers with near prime and above credit scores who monitor their credit with the intention of opening new credit accounts in the near future. When comparing Credit Seekers who monitor their credit to those who do not, credit monitoring consumers open 1.22x more credit accounts, such as credit cards and auto loans, over the following year.

Both New-to-Credit (NTC) consumers – those early in their credit journeys – and underserved consumers – those less engaged in the credit market overall – saw similar higher levels of new credit activity for the credit monitoring segment. NTC consumers who monitor their credit display 1.19x higher origination rates for any credit type than those with no history of monitoring their credit, and for underserved credit monitors it is 1.21x. “For new-to-credit and underserved consumers, who typically have a more difficult time expanding their credit wallets, credit monitoring can be a crucial enabler of greater credit education and access,” said Verma.

Percent of Consumers Originating a New Credit Card within One Year of Starting Credit Monitoring

* Non-monitoring consumers were analyzed over the same time from the date when credit monitoring consumers with similar credit profiles began monitoring services   

Credit Managers Benefit from Paying Down Debt and Detecting Fraud

As debt levels have risen to near-record levels in recent years, the study found that the highest share of Canadian consumers (45%) monitor their credit with the intention of keeping an eye on their overall balances and credit health. Credit Managers are defined as consumers with near prime and above credit scores who generally monitor their credit with the goal of reducing or maintaining their balances or monitoring for fraud.

When surveyed, 21% of all Canadian credit monitoring consumers said they were able to pay down debt as a result of credit monitoring. In alignment, the study found that Credit Managers decreased their overall balances by an average of 11% within a year after starting monitoring. “Though we are in a high-interest rate environment with consumer credit balances at near-record levels, it’s reassuring to see so many Canadians taking the initiative to ensure they are paying down or managing their debt levels,” added Verma.

Another primary motivation reported by Credit Managers is protecting against fraud. Nearly one third (32%) of Canadian consumers reported that they continue to utilize credit monitoring services over time to detect and protect against fraud. This benefit is of increased importance to consumers considering the continued rise in fraud activity that has been observed since the onset of the COVID-19 pandemic. Nearly half (49%) of Canadians said that they were recently targeted by fraudulent activity during the second quarter of 2023, with fraud attempts in telecommunications having increased by 400% year-over-year (YoY) over those three months.

Credit Improvers Benefit from Monitoring Scores and Staying Current on Obligations

Credit Improvers, who make up 13% of the Canadian credit monitoring population, are defined as consumers with subprime (poor) credit scores who likely use credit monitoring to understand their current credit situations and take steps to improve their credit scores.

The study found that Credit Improvers in Canada generally experienced credit score improvements of 32 points, on an average, one year after they started monitoring their credit. The improvement was at 37 points for NTC consumers – those borrowers who have recently opened their first-ever credit account. In both instances, the improvement in scores was better than a comparison set of consumers who have no history of monitoring their credit.

Median Score Improvement One Year After Starting Credit Monitoring

* Non-monitoring consumers were analyzed over the same time from the date when credit monitoring consumers with similar credit profiles began monitoring services  

“While Credit Improvers are the smallest segment of credit monitoring consumers in Canada, they also tend to see some impactful benefits in terms of credit improvement,” said Matthew Fabian, director of financial services research and consulting at TransUnion in Canada. “It’s a clear indication that those consumers who are actively looking to improve their credit scores may achieve better results if they monitor their credit and are able to plan their steps and track their progress.”

Free Credit Monitoring Benefits Consumers and Lenders

To help more consumers easily access their credit scores, many financial institutions are offering free credit monitoring tools. This easy access not only helps consumers but enables lenders to build stronger relationships with their customers.

Over one-third of Canadian consumers (36%) said they initially signed up for credit monitoring because it was free. Four in ten (40%) said that they would continue to bank with a lender that offered free credit monitoring, and nearly one quarter of these customers (23%) stated they would prefer the lender providing free credit monitoring services over other lenders when opening new products. Nearly one fifth (17%) said they would prioritize payments to that lender over other lenders’ payments.

“Consumers now expect financial institutions to offer free credit monitoring services, as it provides them the tools to improve their credit profiles, better manage existing credit, and seek new credit in the future. Offering such services clearly benefits financial institutions as many of their customers are more likely to remain loyal to them for future credit activity,” concluded Fabian.

For more information about TransUnion’s global credit monitoring study, click here. Consumers interested in obtaining their TransUnion credit report, credit score, and accessing additional credit planning tools can visit here. Learn more about how TransUnion helps individuals protect against identity theft here.

About TransUnion^® (NYSE: TRU) 

TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries, including Canada, where we’re the credit bureau of choice for most of Canada’s largest banks. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this by providing an actionable view of consumers, stewarded with care.

Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good^® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.

For more information visit: www.transunion.ca

[1] A new-to-credit consumer is one with no prior credit history on their credit bureau file who opened their first-ever traditional credit product such as a vehicle loan, credit card or other product unique to their region.

[2] Underserved consumers are defined as any person who has two or more years of credit experience, but no more than 2 currently open accounts of one product type ever.

[3] Served consumers are those who are credit-visible, active consumers who have two or more years of credit history, currently have three or more credit accounts open, or have had two or more different credit product types currently or in the past.