| Understanding Your Credit Report |
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You’re now up to speed on what each score means but you want to know exactly what a credit score is, right? Okay so, a credit t score is a marker of the echelon of risk that a borrower represents. It’s a numerical expression based on statistical analysis of person’s credit files assigned by credit grantors. Basically, your credit score is used to determine just how risky it would be to lend you money. Lenders use credit scores to determine not only who qualifies for a loan but at what interest rate and what credit limits. Good, you’re thinking, now I’d like to know exactly what information is contained in my credit report. Here it is: • Personal identification like your name, address, date of birth and SIN number. • A list of all individuals and organizations that have requested a copy of your credit file in the past three years. • Public record information such as information regarding secured loans, bankruptcies and judgments. • Any information concerning a third party collection agency trying to settle a debt. • Offers details of your credit transactions and shows whether payments are being made. • There is also a consumer statement where you can add brief commentary about any information found in your file. For example, if you suffered any setbacks due to temporary unemployment, illness or extenuating circumstances you can explain such setbacks with your consumer statement. This information is gathered by credit reporting agencies, also known as credit bureaus. In Canada there are two major credit reporting agencies. They are Equifax Canada Inc. and TransUnion of Canada Inc. Federal and provincial laws have very specific guidelines as to who can review your credit file and for what purpose. A copy of your credit file may only be granted to a company or individual with your consent or after they have that they will be reviewing your file. Each time your file is requested a record is made and stored within your file. When you open a new account or apply for credit, the credit grantor needs to be sure that if they grant you a loan they will be paid back. The more your credit file demonstrates that you are capable of paying your debts on time, the more attractive you become to the lender. The credit grantor will evaluate your financial capacity to make monthly payments with the information presented in your credit file and then make their decision on whether or not to honour your loan request.
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