What’s in a free credit report?
A credit report is the entire file of credit-related information that corresponds to your identity, with Canada’s two credit reporting agencies, Equifax and TransUnion. It includes a lot of personal information that confirms your identity, payment history, and the manner in which you’ve historically been managing any debts, like student loans, credit cards, instalment loans and mortgages.
You’ll be able to see how the lenders you’ve had agreements with in the past, have reported your possible missed or late payments or if you’ve had any delinquencies. Information stays on your credit report for six to seven years. For example, bad information from a bank or debt collection can stay on for six years, whereas a bankruptcy can stay on for a maximum of seven years.
What’s a credit score?
Many people confuse a credit score and a credit report. Your Credit Score is simply a number. Your Credit Report, also known as Consumer Disclosure, is like a report card of your entire credit history. It often includes your credit score, but not always. In Canada, your credit score is a number between 0-900.
Every time you use credit, such as borrowing money from a bank, apply for a car loan, use a credit card, or apply for an instalment loan, that information, along with how well you stick to your repayment agreements, gives you points. Those points contribute to how your score is determined. Other details are included on your credit file that may take some points off.
For example, if you’ve made late payments or if you consistently keep your credit availability maxed out, your score will be lower.
It’s important to note that you don’t have just one official score. Each of the credit bureaus weighs the various factors in determining your score a bit differently, so your Equifax credit score could be a few points (or maybe even several points) different. Lenders generally use one or the other, not both, so it’s important to know both.
Why is a credit score important?
You’d be surprised that credit is important for things like securing a cell phone, or buying a car. It is essential that your credit score be high enough for your prospective lender to consider your application. While you may have a general idea of what your credit rating really is, knowing your own credit history, of course, it is crucial that you be aware of what your credit score is, and what other information is on your credit bureau report.
Your credit score is one of the primary tools that a lender, such as a bank, or credit card company uses to decide whether or not they’ll lend to you. They use it to determine their risk in giving you money. Typically speaking, the higher your score, the more likely you are to repay the loan.
Information about how many credit inquiries you’ve made will also be on there, and usually, a hard pull does impact your credit. Checking your credit score is also vital if there’s incorrect or insufficient information there, due to identity fraud or incorrect reporting from your lenders. You’ll need to see a copy of your credit report from the credit bureaus so that you can make sure that you are receiving the best possible score. The better your score is, the better interest rates you’ll get for premium credit products, like mortgages.
How do you get your Free Credit Score Report?
If you have two minutes to spare, you can get your free credit score report from Borrowell. When you sign up for an account with them, you’ll be able to view your score, what’s impacting your score and even get customized tips on how to improve your score!
What’s a good credit score in Canada?
In Canada, a good credit score falls between 600 and 700 points. A score above 700 is considered “very good”. Anything over 760 is considered “excellent”, all the way up to the credit score cap of 900.
Does checking your credit score hurt it?
There are two kinds of credit checks; a soft inquiry and a hard inquiry. A soft inquiry is when someone does a background check on you, you want your own report, or you’re pre-approved for a mortgage. It doesn’t affect your credit at all. A hard inquiry is when a lender pulls your entire report. These pulls can drop your score by 5-10 points each time. If you’re shopping around for the best rate for a loan, hard inquiries can significantly ding your score.
How can you increase your credit score?
As you can see, your credit score does depend on your actions, which is great news, because it means you can improve your credit score! One very quick way to bring up your score is to make sure that you don’t have any late payments. Another one of the easiest ways to improve your score is to reduce your credit utilization. If you don’t max out the credit you have, you can see improvement very quickly. Another way is to get an instalment loan or a personal loan and consolidate your debt!
What if I’ve been a victim of identity fraud?
If you’ve experienced identity theft, or credit fraud that occurred in your name, it too is likely to be on your credit file, and you’ll definitely want to make sure that the Credit Bureaus know what’s happened, so that they can show that information on your credit file too, as it would likely mitigate the effects of a lower credit score. More and more Canadians are being hit by phishing scams, so it’s important to watch your score regularly - at least once a year!