Credit can be complicated, but if handled astutely, it is a tool that can help you fulfill your financial goals. A good credit report improves your ability to purchase property, convenience in taking loans, consumer protection, and access to education. However, poor credit management can be expensive, and you can end up stuck in debt.
Who Compiles Your Credit Report And Credit Score?
In Canada, two major for-profit companies compile your credit report: Equifax and TransUnion. These firms collect and compile credit data from public credit records or private lenders. Then, they sell this information to employers, proprietors, creditors, and insurance agencies.
These companies use the information to determine your creditworthiness. More often than not, the data on your reports from the two bureaus is likely to have inconsistencies depending on the types of credit you have and their scoring process.
Who can review and use your credit report?
Your credit score is critical to attaining your goals as it is examined by your employer, lender, landlord, and insurance companies. The information on your report advises these institutions on whether to allow you credit, offer a job position, or continue employment.
You will be required to provide written consent for an organization or an individual to access your credit report. But, in the provinces of Nova Scotia, Prince Edward Island, and Saskatchewan, businesses that want to review your report can do so by only notifying you they are accessing it.
What’s included in your credit report
Your credit report includes personal information, credit history, and records of institutions or individuals who have accessed your report within the last two years.
Most institutions that review your report are primarily concerned about your credit history. This shows your credit payment history, payment amounts, activity dates, and the debts you currently owe. This section of your report may also include any information in the public record about your credit history, such as bankruptcy, foreclosures, or any other court-ordered debt collection activity.
Financial information on your credit report
The financial information included in your report includes your payment history, credit utilization, owed amounts, and your new credit inquiries.
The bulk of your credit history plays the most significant role in determining your credit score. However, your credit utilization and the amount of debt you currently owe are also essential factors to consider.
Why your credit history matters
Your credit history is crucial as it includes data on how you have handled credit repayments in the past. The financial details that might harm your reputation with lenders and other institutions include partial payments, late payments, delinquencies, accounts in collection, liens, bankruptcies, and missed payments.
Any employer, lender, landlord, or insurance company that reviews your credit history and notices any of these items on your report will have difficulties continuing or beginning a relationship with you.
What to consider on your credit report
Your credit report carries most if not all aspects of your borrowing and repayment history and a free credit score. Your credit score is calculated using six primary metrics: payment history, credit utilization, amounts owed, length of credit history, new credit, and public records.
Also, your report could help you identify cases of identity theft. Use both credit bureaus to check for signs of fraud in your report. Make sure no one has tried to open credit cards or access loans in your name.
Why check your credit report
It is pivotal to keep track of your credit scores and report any inconsistencies that could hinder your ability to secure loans, insurance, or mortgages.
Check your credit report to ensure you are not a victim of fraud or identity theft at least once a year. It would be best if you asked for a report from the bureau every six months. Spacing your requests is an excellent way of detecting problems and errors sooner. You could also set a fraud alert to notify you if any suspicious accounts are created in your name or anyone asks for a loan through your credit cards.
How to get a free credit report
In Canada, you can access a free TransUnion or Equifax credit report. However, TransUnion only offers free reports for residents of Quebec. Visit their websites and follow their directions on how to get a copy of your report.
You might be required to provide copies of acceptable identification such as a passport or a driver’s license. You will recieve your report via your preferred email address.
Some personal Canadian finance sites offer a free copy of your report when you register using your email address. Some banks provide free weekly reports as a benefit of banking with them.
How long information stays in your credit report
In Canada, information about your credit stays on your report for different lengths of time, depending on multiple factors. Credit repair, therefore, often takes different periods for different individuals. Factors that determine how long credit information lasts on your report include:
- Type of financial information
- The credit bureau that compiled your report
- The province you live in
Errors to look out for in your credit report
Credit monitoring helps pinpoint mistakes or inconsistencies in your data. You should correct any inaccurate data on your report should to avoid poor ratings and missed opportunities. Some of the errors you should watch out for in your report include:
- Errors in your personal information section, including the wrong date of birth, wrong phone number, or mailing address
- Negative information that remains on your report even after the maximum number of years it should be displayed have elapsed
- Mistakes in credit card or loan accounts, including payments you made on time but recorded as late payments
- Accounts listed, but you never opened them – a sign of identity theft
Fixing errors on your report
If you notice errors in your latest report, it is recommended that you take immediate action. Follow the guideline below to make a factual dispute of any incorrect information on your report.
Gather information to support your case
Compile all the statements, receipts, and other documents related to your credit accounts to prove your claim.
Get in contact with the credit bureaus
Both TransUnion and Equifax Canada will provide you with forms to fill out the errors in your report. After filling out and submitting the forms, each bureau will check the claims against the reported information and decide whether to update or deny your proposed changes.
Contact the creditor
Contacting the creditor who sent negative information to the credit bureaus could help fast-track the correction process. Request verification of their documents against your information and send them copies of your updated records.
Filing a complaint about a credit bureau
If you are still unsatisfied with the updates made on your report, try speaking to a third-party dispute-resolution body. If the errors remain unresolved, you can make a formal complaint against a credit bureau. You can do this by directly reaching out to the credit bureau or filing a complaint with your provincial or regional consumer affairs office.
Credit management can be challenging, but not with expert help. You might be wondering how to rebuild your credit score, and would like to learn how credit counseling can help with your finances. After a session with one of our experts, you will better understand how your credit score could improve and how you could avoid a poor credit rating. Call to set up a free session with us today.