Credit Bureau Reports

Have you checked out a copy of your credit report lately?  It’s a good idea to review it from time to time (even once a year) with the prevalence of identity theft, but even to just check for errors.

You can get a copy of your credit report from equifax.ca (the main source for banks and other lenders) and also transunion.ca.  There is a charge for an immediate on-line report, but you can get a free copy within a couple of weeks by printing out the request form and mailing it to them.

Your Credit Report: Knowing What To Look For

First look at the personal identification information listed on your credit report.  Make sure your name, address, current employment, birth date and SIN are correct.  On the mailed version part of the birth date and SIN are X’d out for your protection.

Next it’s important to look at the credit enquiries that have been made.  Your bank and credit card company may make enquiries in order to update their information and perhaps increase credit limits.

Related: Top Cash Back Credit Cards

You authorized this when you originally signed all the application documents (do you remember?).  However, there may be enquiries from unauthorized companies that are fishing for information and you need to be aware of these.

The rest of the report will include your credit history – credit cards, loans and lines of credit, and bankruptcy and collection information, if any.  It will show when the account was opened, your own or joint account, the credit limit, outstanding balance, when the creditor reported, last payment made and payment history.  Check it for accuracy.

In my bank lending days I dealt with more than a few people who were surprised to see collection notices from fitness clubs, book and CD/DVD clubs and other such places that require a long term contract that they didn’t know about.  Even if the company has disappeared the accounts are still sent to collection – unfair but still done.

Your Credit Rating

Financial institutions use a numbered scoring system called a “beacon score” to assess your credit worthiness.  The higher the score, the easier it is to receive a loan, credit card or mortgage and to perhaps negotiate a favourable interest rate.

What affects the beacon score?

1. Number of enquiries – Too many enquiries can suggest a credit seeker – someone who applies for credit from numerous sources.  So be aware of this when you are interest rate hunting at various banks.  If an application is completed, a credit enquiry will definitely be made and you will have to explain.
2. Detrimental history – Bankruptcy, collections, late payments (more than 90 days), garnishment of wages, and even orderly payment of debt will automatically bring your score to zero.  You may be able to borrow if you have a good explanation and have had a clean record for the last several years.
3. Alternative lenders – The presence of finance company information will reduce your score.  Be aware that deferred payments at places like furniture and electronics stores are contracts that are sold to finance companies for processing and payment collection.  Even if you pay in full within the “don’t pay” period the information is still on your record.
4. Too many accounts – Carrying high balances and having accounts over their credit limit can hurt your score.  Even if you pay your credit cards in full each month there may be a balance showing depending on the reporting date.  Keep your cards to a minimum and don’t spend over the limit even if the credit card company allows it.
5. Too many credit cards – Especially retail charge cards.  Make sure that inactive and cancelled cards are actually closed.

Take Responsibility To Ensure Accuracy

Information is purged from the credit report periodically – inquiries and voluntary deposits such as orderly payment of debt after 3 years; credit and banking information, collection accounts and secured loans 6 years from last activity; bankruptcy 6 years from discharge.  There are some exceptions to these time periods depending on the province.

If you find any errors or inaccuracies in your credit report first contact the credit company involved.  Unfortunately they are usually slow to respond so you need to keep at them until it is corrected or deleted.

If you are unsuccessful in resolving the matter you can send your explanation to the credit bureau and they must include it on the credit report.