Understanding Your Credit Report
Your credit report is extremely important to your finances. Learn how to get the most out of it.
A credit report is an essential part of your financial outlook. Maintaining clean, accurate credit reports is also a key part of using credit successfully, in order to ensure you have the highest credit scores possible. This makes it imperative that you understand how credit reporting works and understand what you need to do to ensure your credit reports are accurate.
If your debt is getting out of control, it is most certainly having a negative impact on your credit. Consolidated Credit’s trained credit counsellors can be reached at 1-888-294-3130 and they will provide you with a free analysis on your financial situation and they will offer advice on your best options. You can also take the first step online with a Free Debt Analysis.
What is a credit report?
Exactly what is a credit report? A credit report is a written history of a consumer’s credit use. It is used by creditors and lenders to establish your credit worthiness and help assess your risk as a borrower. They will look at your current situation, and how responsible you have been with credit in the past, and this will allow the creditor to set the terms for your new credit. This could mean the difference between low and high interest charges, or a terrible credit report may prevent you from receiving credit altogether.
How to access your credit report for free
Every consumer has more than one credit report because Canada has two main credit bureaus – Equifax and TransUnion. Both bureaus produce credit reports and lenders will access both files. Credit bureaus charge for instant service, but if you are patient, you can receive your credit reports for free by mail.
What is included in a credit report?
Although the two credit bureaus vary in which information gets included in your credit reports, the following is a list of common elements that appear in your reports:
- Personal Information – This includes your name (including any variations of your name that have been used on some accounts), current and previous addresses, social insurance number, date of birth, and current and previous employment data.
- Credit History – A record of your repayment of past and existing debts.
- Public Records – Any public documents or judgments that may have an impact on your credit risk, such as court rulings, bankruptcy records, consumer proposals, or tax liens.
- Credit Inquiries – A record of each time an inquiry is made to the credit bureau about your credit.
- Additional Relevant Information – Anything else that may be pertinent to a creditor in their risk assessment such as banking information and collections records, though this varies between credit bureaus.
What is NOT included in a Credit Report?
A credit report will never include personal information that could be used by a creditor to discriminate against a consumer (such as race, ethnicity, religious background, sexual orientation and political affiliations); medical history; banking information related to cash or cheque purchases; non-debtor accounts such as cell phone or utility bills (unless they are accounts that have been sent to collections); business or corporate debts.
What is the difference between a credit score and a credit report?
Your credit score is a three-digit number that is generated from information found on your report. Your credit score (generally ranging between 300 and 900) has a huge impact on your financial health and that is why it is important to make sure your report, which influences your score, is accurate.
Why you need to check your own credit reports
In millions of credit reports and hundreds of millions of credit entries, there are bound to be mistakes. Some experts estimate as many as one-third of all credit reports include some kind of error. It may be a small error, or it could be something that could be costing you points on your credit score.
With this in mind, many experts recommend that you check your credit report at least once per year (quarterly is better), or prior to any applying for a new line of credit or taking out a loan. If you find errors, you can access Equifax’s dispute form here, and TransUnion’s here.
If you fear that out-of-control debt is having a negative impact on your credit, it might be time to seek help in eliminating that debt. Speak to one of our trained credit counsellors at 1-888-294-3130 to get expert advice on your unique situation. You can also get started online by trying our Free Debt Analysis.