What’s in a Free Credit Report?
A free credit report contains your credit history and credit score. It includes personal information that confirms your identity, payment history, and how you’ve been managing any debts, like student loans, credit cards, instalment loans, and mortgages.
These reports are compiled by Canada’s two credit-reporting agencies: Equifax and TransUnion. If you’ve ever had bills to pay or taken out a loan, chances are, you have a credit report.
If you want to review your Equifax credit report right now, Borrowell offers a free online credit check plus helpful tips for managing your money and building your credit!
You’ll be able to see how lenders have reported any possible missed or late payments, or if there are any delinquencies.
Information stays on your credit report for up to seven years. For example, unfavourable information from a bank or debt collection can stay on for six years, whereas a bankruptcy can stay on it 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 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. In Canada, your credit score is a points-based number between 0-900.
Your history of using credit (i.e. credit cards, personal loans, car loans, mortgage) combined with your history of repaying your creditors on time will determine your credit score.
If you consistently make late payments or keep your credit availability maxed out, your credit score will be low and will stay low until you improve the situation.
It’s important to note that you don’t have just one official score. Each of the credit bureaus determines your score a bit differently so your Equifax credit score could be slightly different from your TransUnion score. Lenders generally use one or the other, not both, so it’s important to know both.
Requesting a free annual credit report is good practice. It's wise to keep tabs on what information the credit bureaus have about you.
Why Is a Credit Score Important?
You might be surprised that credit is important for things like getting a cellphone or buying a car. It is essential that your credit score be high enough for your prospective lender to consider your application.
Your credit score is one of the primary tools that a lender (such as a bank or credit card company) uses as an indicator of how trustworthy you are. It is a tool they use to determine their risk—the higher your score, the lower their risk.
It’s important to check your credit score regularly as it can alert you if something is amiss. If it’s suddenly low and you don’t know why, it could be due to identity fraud or incorrect reporting from your lenders.
You can obtain a free copy of your credit report to ensure 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.
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 is likely to be on your credit file. Inform the credit bureaus. Let them know about it so that they can highlight this in your report and mitigate the effects of a lower credit score. More and more Canadians are being hit by phishing scams, so it’s important to check your score regularly.
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 personalized tips on how to improve your score!
What’s a good credit score in Canada?
According to Equifax, a good credit score falls between 660 and 724 points. A score above 724 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 for employment purposes, or if you want to check your own report. It won’t affect your credit score.
- A hard inquiry is when a lender requests to pull your entire report. These pulls can drop your score by 5-10 points each time. Common hard inquiries include mortgage applications, credit card applications, and auto loan applications. Shopping around for the best rates on a specific type of loan might be a concern to you, but credit bureaus usually provide a rate-shopping window by bunching up multiple inquiries within a certain time period and only counting them as one.
How Can You Increase Your Credit Score?
If you’ve been declined finance, it’s usually because you have a low (or no) credit score. But as you can see, your credit rating doesn’t have to stay low. A few simple changes to the way you manage money can improve your credit score.
One quick way to bring up your score is to stay on top of any bill payments that are due.
Another easy way to improve your score is to reduce your credit utilization. If you don’t max out the credit you have, you’ll see improvement very quickly.
An instalment loan or personal loan can help you consolidate your debts. That means taking out a loan to pay off multiple existing loans that have higher interest rates. Consolidating your debts can help you quickly pay off debts and save on interest costs. Debt consolidation will help build your credit score in the long run. If you want to learn more about debt consolidation, Fresh Start Finance is here to help!
There you have it; three easy things that will put you on the path to better credit. But first things first—know your credit score!
Borrowell is an incredibly easy-to-use tool that lets you check your credit score without dinging it. It’s absolutely free of charge and offers personalized tips to help you build credit and save money! If you’re serious about winning when it comes to personal finance, Borrowell is an ace up your sleeve.