Your Credit Rating

A credit rating is like a grade given to you by credit-reporting agencies to describe your credit payment history. The more you make your payments on time, the higher your credit rating.

What is the advantage of having a good credit rating?

A good credit rating ensures you’ll have a good reputation with financial institutions. When you’re ready to borrow a large amount, for a car or a home, for example, having a good financial reputation will make getting a loan from a financial institution easier.

The reverse is also true. If you have a bad credit rating or a low credit score, a lender may refuse to give you a loan or charge you a higher interest rate. A bad credit rating can also hurt your chances of getting a job.

Who can request to see your credit report?

Any person or organization who wants to see how reliable you are in making payments on time, such as:

• financial institutions you’ve approached for a loan
• businesses, before selling you something on credit
• landlords, when deciding whether or not to rent you an apartment
• employers, before giving you a job
• yourself, to see if the information it contains is accurate

Credit-reporting agencies will only give out information from your credit report if you’ve given persons or organizations permission to request it. When you apply for a loan or a credit card, you are usually giving the lending institution permission to check your credit history.

What kind of information does a credit report contain?

• Personal information: name, address and birth date.
• Employment history: name of employer, position, length of time employed, income.
• Credit history: late payments, unpaid debts, loan payment history, available credit.
• Public records: unpaid taxes, bankruptcies, court judgements against you.
• A list of everyone who has inquired about your credit.

How long does the information stay on record?

Credit-reporting agencies keep the information for 6 to 7 years.

How to have a good credit rating

• Pay your bills as quickly as you can.
• Pay the balance due on your credit card on time each month.
• Borrow only what you need and are able to repay.
• Repay your loans on time and as quickly as possible. You not only get a good credit rating but save in interest costs too.

How to get a copy of your credit report

You can request a copy of your credit report from a credit-reporting agency:

• online: you receive the report almost instantaneously but credit-reporting agencies charge a fee for the service
• by mail: it takes a little longer but the service is free

You’ll have to furnish the credit-reporting agency proof of your identity. Contact the agency directly to find out what documents are required to get a copy of your credit report.

How to correct an error in your credit report

Contact a consumer protection organization to find out how to request a correction to your credit report. Please see the Option consommateurs Web site for more information.

Did you know?

• Even unpaid library fines and parking tickets may be considered by credit-reporting agencies to be a sign of bad credit management.
• Don’t write cheques if your account balance can’t cover them; a cheque returned for non-sufficient funds can also damage your credit report.
• Asking for an increase in your credit limit several times in the same year can also negatively impact your credit report.

For additional information about credit reports, please visit the Financial Consumer Agency of Canada Web site.

Find out more – Visit the Equifax Canada and TransUnion of Canada Web sites.