Have you ever thought about lying on your credit application? You’re not alone. 10 per cent of Canadians said it’s okay to lie by inflating their income when applying for a mortgage, according to a recent survey by credit reporting agency Equifax. Even more troubling is the fact that 9 per cent admitted to actually lying on credit card and mortgage applications.
While lying on your credit application may seem like a victimless crime, lenders don’t see it that way. Lying on your credit application is a serious offense – it’s considered fraud. Let’s take a closer look at the findings of the survey and discuss why it’s not a good idea to fib on your credit application.
What is a Credit Application?
If you’ve ever borrowed money, you’ve more than likely filled out a credit application. Credit applications are completed when you’d like to obtain credit, such as a credit card, line of credit, or mortgage, from a lender. Although there’s no standard credit applications all lenders use, credit applications request the same basic information, such as your name, address, date of birth, marital status, income, and employment details. The credit application will also include the type of credit you’re applying for, the interest rate and credit limit. The lender uses your application to verify your credit history, employment status, and most importantly, your ability to repay the loan.
Why You Shouldn’t Lie on Your Credit Application
If you’re thinking about lying on your credit application, you should think twice.
“It’s a bad strategy,” says Tim Ashby, vice president of personal solutions for Equifax Canada. “Obviously it’s not sustainable. It means that people are concerned about their ability to get a mortgage. We definitely want to counsel Canadians to work within their means and approach their debts with financial responsibility.”
The truth is, lying on your credit application hurts all borrowers. It raises the cost of borrowing for everyone, as lenders pass on the losses from default to honest people like you and me. Not only can lying on your credit application lead to criminal charges, you can be blacklisted by other lenders. Lenders won’t want to touch you with a 10 foot poll once they’re aware you have a history of lying on your credit applications. Is it really worth the risk?
1 in 4 Canadians Don’t Know Their Credit Score: Equifax
The survey also found less than one in four (23 per cent) Canadians know their credit score. In fact, just 26 per cent knew their credit rating when applying for a mortgage. This shouldn’t come as any surprise, as credit reporting agencies don’t make your credit score readily available. Although you’re entitled to a free credit report every 12 months, you’ll have to pay extra for your credit score.
Knowing your credit score is important, as it can mean the difference between your credit application being approved or tossed in the rejected pile. Scores typically range from 300 to 900. Good scores are typically 670 and higher; anything over 750 is considered excellent. A good credit score can be a major negotiating tool for getting the lowest mortgage rate with lenders, while a bad score can make it difficult to find a lender willing to lend you money.
There are several factors that influence your credit score that you should be familiar with. These factors include your payment history, amount of debt, length of credit history, types of credit, and credit inquiries. If your credit score is less than ideal, the good news is there are things you can do to improve it. Regularly reviewing your credit report, paying your bills in full and on time, and not exceeding your credit limit are just a few of the things you can do to help boost your credit score.
The Bottom Line
If you’re thinking about lying on your credit application, don’t do it. The risks far outweigh the benefits. While you may get away with it one time, you could find yourself blacklisted with lenders and possibly face criminal charges if you’re caught. Lying on your credit application is considered fraud. It’s a serious offense that hurts everyone.
