How To Check Your Credit Score

By on January 9, 2013 No Comments

Why Your Credit Score Is Important

Your credit score says a lot about you.  Any time you allow an institution (like a bank when applying for a credit card or a broker when applying to a mortgage) to check your credit score, a report is run that goes through every loan you’ve taken for the last 6 years.

The report checks how much you owe, whether you make your payments on time, the total amount you can borrow, and more.

Typically this report generates a score from 300 to 900.  The higher the number, the lower your perceived risk with lenders, which means you’ll be able to borrow more money at a lower rate.

For this reason it’s important to keep your credit score up.

What Is Your Credit Rating?

Depending on the reporting agency you work with, some will include a credit rating along with the credit score.  The credit rating ranks each loan you have on a scale from 1 to 9.  This time a lower number is better.  A ‘1’ means you pay your bill on time, and a ‘9’ means you don’t pay your bill or you’ve started or completed a debt repayment proposal to that lender.

Beside the number, there’s also a letter, indicating the type of credit that that loan is.

‘I’ means the loan is an Installment loan.  This is where you’re given a loan and pay back in set installments, such as a car loan.

An ‘O’ loan is for Open credit, most commonly a line of credit, where you can borrow money as needed and pay back on a flexible schedule.

An ‘R’ loan stands for Revolving credit, most typically a credit card.

So if you had a credit card that you always paid back on time, you might see an R1 rating for that card on your credit report.  If you have a car loan that you’ve missed a payment on, you might see an I2.

Why It’s Important To Check Your Credit Report

If you’re thinking to yourself “I always pay my bills on time, so there’s no reason to check my credit report” you may be in for a big surprise.  In one survey, done by the Public Interest Advocacy Centre, they found that 18 per cent of people find errors on their credit report.

An error means less borrowing ability and higher interest rates, but it can also warn you that you’ve been the victim of identity theft.

Even if you’re completely in the right, correcting these errors can be a huge hassle, and the sooner you catch it the better.

The good news is that it’s relatively easy to find your credit score.

How To Check Your Credit Score

In Canada there are two main companies that provide credit reports: Equifax Canada and TransUnion Canada.

There are two options for requesting a credit report.  If you are more interested in just confirming your details are accurate, then you can get a credit report for free through the mail.  It will obviously take longer than the almost-immediate online version, and it won’t actually give you your credit score.

What you’ll get are a list of items on your credit report, such as credit cards, school loans, car loans, etc.

If you find something on there that shouldn’t be, you’ll have to take steps to correct it, which we’ll be covering in our next post.

To get your actual credit score, you’ll have to pay a fee, but your report is delivered online almost immediately.

These sites both make it a bit tricky to find the free options, but check out the difference and decide what you need.  The paid versions are about $25, which really isn’t a lot for the amount of information you’re getting.

What If I Find Errors On My Report?

If you find any errors on your report, read our next post for instructions on how to correct them.



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