Guide to Your Credit Report in Canada

Your credit report is a record of your past and ongoing debts, and creditors use it to assess your repayment abilities when you apply for any form of financing in Canada.

When an institution or individual needs to evaluate your personal finances for an application – say they apply for an installment loan, a credit card, an apartment to rent, or even a job – they will check your credit report. Your credit report is a record of your past and ongoing debts, and creditors use it to assess your repayment abilities when you apply for any form of credit.

While people often consider the terms credit report and credit score interchangeable, they are very different. A credit report is a compilation of all the necessary personal and financial information that will determine how risky it is for a financial institution to provide you with financing. A credit score provides a rating based on this information.

Your credit score - which can be anywhere from 300 to 800+ - is based on your credit history and can affect your chances of getting a loan or credit approval. It also determines the interest rate you will receive and end up paying on the loan. While some lenders look at your credit score to approve your loan application, there are other types of lenders that can provide personal loans even with bad or no credit history.

In this guide, we’ll explain the importance and meaning behind your credit report, and even who can see it and why.

• The Importance of a Credit Check in Canada
• How to Check Your Credit Report in Canada
• Specific Information Found in Your Credit Report in Canada
• Understanding Codes in Your Credit Report
• Who Can Check and Use Your Credit Report in Canada?
• Monitor Your Credit Report
• How to Benefit from Your Credit Report

The Importance of a Credit Check in Canada

It’s important to pay attention to your report with quarterly credit checks, in order to maintain and even improve your creditworthiness.

Your report provides a breakdown of your overall credit status as well as your repayment history, the types of credit you have, use of available credit lines, all of which will help with the first step towards having good credit score. This information assesses your reliability in repaying financial institutions, lenders and credit card companies. It typically gets updated every 30 to 90 days.

Your credit file reveals your financial reliability and will impact the financing options you have access to, which is why it’s so important to check it at least once a year. Having a positive credit history allows you to get a job, achieve lower interest rates, and will place you in a position to achieve your financial goals.

Having a negative credit history may result in difficulties accessing loans, and you may have to approach lenders that provide loans for people with poor credit.

How to Check Your Credit Report in Canada

You can check your credit report by requesting a copy from agencies like TransUnion and Equifax, the two main credit bureaus in Canada.

You can request your credit history from both agencies as there could be discrepancies. And since they offer a credit report for free via mail, fax, phone or online, it’s a good way to keep up to date on your financial standing.

Both credit bureaus will ask you to create an account in order to access your credit files, but the process is simple and worth the time needed to make sure you have a healthy credit record.

Specific Information Found in Your Credit Report in Canada

Credit reports highlight your personal details, employment history, and credit history, all of which reflect your credit practices – good or bad.

1. What is Included in Your Credit Report?

Your credit report includes your:

● Personal details. These include your name, date of birth, social insurance number (SIN), telephone number, driver’s license number, and passport number. The name that is used in your credit report will represent a compilation of the ones you provide to different lenders, so make sure they are consistent. Otherwise, your credit report will include different versions of your name.

● Employer name. This only appears if you have ever provided it to a Canadian lender or other entities that report to credit reporting agencies.

● Current and previous addresses. Checking that the listed addresses are correct is important. If you find an address you have never listed in your report, you can dispute it to prevent the possibility of identity theft.

● Account payment history. This outlines your lines of credit, credit accounts, credit cards you own, mortgage loans, car loans, etc. Your two-year payment history and delinquent account information will also be in your credit report. This means if you’ve written bad cheques, left some bills unpaid beyond their deadlines, had student loans or insufficient funds, the information will likely appear in your credit report.

● Credit inquiries. Your credit report not only includes historical information but will also have recent applications listed under the inquiries section. This section compiles the details of companies or lenders who have requested to access your credit report for the past 24 months.

● Revolving accounts. These refer to credit accounts that don’t have a maturity date and can be open for as long as you want.

● Public records. Events such as bankruptcy and foreclosures will be included in your credit report and may appear for the next 6 or 7 years.

● Collection accounts. Unpaid debts that were sent to a collection agency will appear in your credit report. So, it’s important to remain up to date with all of your bills, no matter how small. Even those that will typically not be reported to credit bureaus can end up in the collection account section and impact your creditworthiness.

TransUnion mentions that personal statements, such as consumer explanations regarding issues or fraud victim statements about identity fraud, can also be found in your report when relevant.

The Financial Consumer Agency of Canada (FCAC) states that, depending on whether your debt information is positive or negative, this history could remain on your report for six years or indefinitely. Typically, negative debt information remains for roughly six to seven years, depending on the province.

In contrast, positive information can remain indefinitely and can improve your credit score. Positive information can include loans you repaid on time.

2. What is NOT Included in Your Credit Report?

One of the details that will not be included in your credit file is your credit score, despite the fact that your report impacts your score. You have to make a separate request for your credit rating number.

Your credit report also does not include financial information that is not related to your debt history. Transaction details, for instance, will not be included. The report will not specify the items you buy, just that you have a loan for them. Your tax liens and income or bank account balances are also not included.

Irrelevant personal information such as your marital status, medical information or criminal records will not appear in your credit file, either.

Understanding Codes in Your Credit Report

You can access samples of credit reports from TransUnion and Equifax. Most of your credit report information is easy to understand. However, you will likely find codes in there that you don’t understand. They represent the type of credit you use, the length of debt, and your responsibility with repayments.

Here’s a credit report code breakdown:

● I (Installment credit): This indicates you have a loan for a certain duration to which you make regular fixed payments.
● O (open status credit): You can borrow money up to a certain amount. The amount depends on what is permitted.
● R (revolving or recurring credit): This means that money is available for you to borrow continually up to your credit limit.
● M (mortgage loan): This indicates any mortgage you may have.

The numerical digit in the code indicates various stages of a debt or its status.

● 0: Indicates a new debt.
● 1: Indicates on-time payments and numbers.
● 2-3: Indicate late payments, according to lateness. Each subsequent digit is for 29 days of lateness. If the debt hasn’t been repaid by the end of the 29th day, the number rating will increase to the next level and remain for another 29 days.
● 5: Indicates 120 days of overdue payment not yet sent to a collection agency.
● 9: Indicates the debt is with a collection agency or is a declared bankruptcy.

Numbers 47, and 8 are the stages in between. Number 6 is not used.

If you have a car loan debt that has been passed to a collection agency, it would show up on your report as “I9.” If you have a late credit card payment between 31 and 59 days late, it should show up as “R2.”

Who Can Check and Use Your Credit Report in Canada?

Entities with “permissible purpose” can make credit report inquiries. These include lenders, landlords, employers, insurance underwriters, and sometimes government agencies. That said, when an organization makes a credit inquiry, a credit reporting bureau will be the one sending them your file.

Although most provinces must obtain your written consent to check your credit records, Nova Scotia, Prince Edward Island, and Saskatchewan will only require lenders to inform you that a check is taking place and thus don’t require your permission.

There are two different types of inquiries: a hard inquiry and a soft inquiry.

A hard inquiry involves a credit report check by a lender or business to decide on an application. This type of inquiry will appear in your report and will affect your credit score. A soft inquiry, however, occurs when you check your report and it will not affect your score, so you can examine your report as much as you want.

Monitor Your Credit Report

Checking your credit file regularly can prevent financially damaging instances of fraud or identity theft. Once you obtain a copy of your report, look for accounts with companies or debts and transactions you don’t recognize. If you find any, dispute the information immediately and request a credit freeze.

According to a survey by Equifax, most Canadians believe that fraud and identity theft are serious threats. However, most don’t monitor their credit report routinely. Likewise, most of those who do check won’t report to the agency if they believe they had fallen victim to fraud or identity theft.

Only 29% of Equifax survey respondents checked their reports over the past few years, and only 38% would file a report with a credit bureau.

Monitoring your credit report can also allow you to track your credit score. This way, if your score drops, you will be able to evaluate why and find ways to improve your credit score.

You can also identify mistakes in the details included in your report, such as your personal and credit account information. You can dispute any inaccuracies with the credit bureaus.

Monitoring your credit history will also allow you to gauge what you need to improve in order to improve your financial standing and overall score. For instance, if you notice you have been falling behind on your bills, you could learn to schedule your payments better and create a budgeting system.

How to Benefit from your Credit Report

Don’t forget that a credit report is essential for businesses or organizations that want to understand the risks involved in granting you a loan, approving your rental application or employing you.

To increase your chances of securing low-interest rates that allow you to meet your financial goals, you will need to review your credit file regularly. Monitoring your report constantly will also alert you of any inconsistencies, potential identity theft or inaccurate information early on, reducing the damage this may cause to your finances or to your credit score, which could dip down if you aren’t consistent.

The common viewpoint is that low credit scores will hurt your ability to access good loans with competitive interest rates. There are, however, lenders who will not focus on credit scores. This allows everyone to have an equal chance of securing a promising loan option.

There are many Canadians who can, for instance, get a cash advance even if they have bad credit score. Private lenders like iCash offers quick access to funds, no matter your credit rating. We understand that life gets the better of everyone whichi is why we provide an easy way to access funds and rebuild your finances. The process is quick and easy and can be done in minutes on your phone safely and securely.

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