Credit Reports & Score
Credit scores play a major role when it comes to applying for loans, credit cards utilities and more. It is the first thing banks and other lenders will look at when making a decision on your request. Bad or low credit scores can affect the loan outcome and interest rate to repay.
With a higher credit score you benefit from lower interest rates and better chances of approval, with lower credit scores lenders may see your file as high risk, offer a higher interest rate or require some security to finalize the approval.
Increase your score with credit score improvement tools used to set goals and that act as guides to help you on your credit improvement journey
Your credit report and credit score
Your credit history is summed up in your credit report. Your credit report is made the first time you borrow money or try to get credit. Credit bureaus, also called credit reporting agencies, get information about your accounts from the lenders. Your three-digit credit score is based on your credit report information. It displays how well you control credit and how much risky it would be for a lender to give you money. A formula based on your credit report is used to figure out your credit score.
Keep in mind that:
- get points if you use your credit responsibly
- If you have trouble taking care of your credit, you will lose points.
- As your credit report is changed over time, so will your credit score.
How important is your credit score
Financial institutions decide whether to lend you money based on your credit report and credit score. They also use them to figure out how much interest you will have to pay if you borrow money from them.
For individuals who have no credit history or a bad credit, it might be harder for you to get a credit card, loan, or mortgage. It could even make it hard for you to get a job or rent a house or apartment.
If your credit history is good, you might be able to get a loan with a lower interest rate.
The method to figure out your credit score
You can’t know for sure how much your credit score will change depending on what you do. The formulas that credit bureaus and lenders use to figure out credit scores are kept secret.
Here are a list of items that can have an impact on your credit score:
- amount of time you had credit
- amount of time each credit on your report has been there
- If your credit cards have a balance
- If you miss payments often
- how much you owe
- being close to, at, or over the limit of your credit
- how many credit requests have been made in the past
- type of credit you are using
- If a collection agency has been sent to get your debts
- any insolvency or bankruptcy on file
Lenders decide on their own what your credit score needs to be for them to approve your loan.
If you have good credit, you might be able to get interest rates that are lower. But if you check your credit score, it may not be the same as the score a lender sees. This is because when figuring out your credit score, a lender may give more weight to certain information.
Who writes your credit report and gives you your credit score?
In Canada, there are two main credit bureaus:
These credit bureaus keep track of how you use credit and share that information with other companies. Equifax and TransUnion only get information about your financial history in Canada from your creditors.
If you ask, some Canadian banks may be willing to look at your credit history from another country. This might need more steps. You could, for example, ask for a copy of your credit report in the other country and meet with a branch officer in your area.
Who can see your credit report and use it?
Credit bureaus have rules about who can look at your credit report and what they can do with it.
The list below is who can look at your credit report:
- There are banks, credit unions, and other places that handle money
- credit card companies
- car dealerships and rental companies
- mobile phone companies
- insurance companies
Businesses or people that use your credit report to make decision on your file/request. These decision could involve:
- lend you money
- collect a debt
- look at you as a possible tenant
- consider you for a job
- provide insurance for you
- offer you a better job
- offer to give you more credit
“Check your credit” or “pull your report” may be a request from a lender or other organization. When they do this, they are asking the credit bureau for a copy of your credit report. This shows up on your credit report as a hard pull credit inquiry.
If there are too many credit checks or inquiries on your credit report, lenders may be worried.
Companies would think as if you’re:
- needing money right away
- trying to spend more than you have
Consent and checks on your credit
Most of the time, a business or person won’t be able to use your credit report without your permission.
Only in these provinces, a business or person needs to advise you that they are checking your credit report:
- Nova Scotia
- Prince Edward Island
In other provinces, someone needs your written permission to look at your credit report. When you sign a credit application, you give the lender permission to look at your credit report. When you apply for credit for the first time, most lenders can run your credit report if you allow them to do so. They can also use your credit whenever they want as long as your account is still open.
Most of the time, if you agree, the lender can also share information about you with credit bureaus. This is only true if the lender agrees to give you the loan.
Some provincial laws let government officials see parts of your credit report even if you don’t give them permission. Among these are judges and police.
What does your credit report show?
Your credit report has information about you, your finances, and your credit history. It can take anywhere between30 to 90 days for your credit report to be updated.
Your credit report has information about you and might have information about:
- date of birth
- current and previous addresses
- current and previous telephone numbers
- social insurance number
- driver’s licence number
- passport number
- current and previous employers
- current and previous job titles
Your credit report could include:
- payments that don’t have enough money to cover them.
- checking and savings accounts that were closed “for cause” because of a debt or fraud.
- Credit cards, retail or store cards, lines of credit, and loans are all forms of credit.
- bankruptcy or a credit-related court ruling against you
- debts sent to collection agencies
- inquiries on your credit report from lenders and other people who have asked for it in the past three years
- If you have a lien on something, like your car, the lender can take it away if you don’t pay
- fraud alerts and identity verification alerts
Your credit report has information about your loans and credit cards, like:
- when you first started using it
- how much you owe
- If you’re on time with your payments
- if you miss payments
- If your debt has been given to a collection agency
- If you spend more than you can afford
- Information about a person that can be found in public records, like a bankruptcy
- Checking and savings accounts that were closed “for cause” can also be on your credit report. These include accounts that were closed because the account holder owed money or did something wrong with the account.
Other accounts that a credit report shows
Your cell phone and internet provider may tell your credit bureau about your accounts with them. Even though they aren’t credit accounts, they can show up on your credit report.
Your mortgage information and how well you’ve paid your mortgage may also be in your credit report. Credit bureaus decide whether or not to use this information when figuring out your credit score.
If you add a home equity line of credit (HELOC) to your mortgage, it may be shown on your credit report as part of your mortgage. This would be reported separately from your mortgage.