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A credit report is a thorough, detailed report including all the information in a person’s financial history. Canada’s two credit reporting agencies, Equifax and TransUnion gather all information relating to your credit accounts, then use that information to create a credit report in your name. This includes your residential address history, employment record, and credit history. Lenders use this report, with other details, to determine your creditworthiness.
How Your Credit Report is Divided
Your report is divided into six main sections. When you open a new account, miss a payment or move; your creditors update these sections with new information. Most creditors report new information approximately every 30 days to update the account balances and payments you make.
These sections are:
- Personal Information (name, address, date of birth, telephone number, driver’s license, passport number and Social Insurance Number)
- Employment (all your current and previous jobs/employers)
- Consumer Statement (if you’ve ever had a conflict and the investigation did not resolve this issue, you have the right to add a short 100-word statement to your credit file, free of charge, explaining your side of the issue)
- Account Information (details of your credit accounts, such as credit history and payments to creditors. This also includes your credit cards, retail or store cards, lines of credit, personal loans, cell phone and internet accounts)
- Negative banking information (your late payments, closed accounts with delinquencies, bad cheques, non-sufficient funds, collection accounts, charge-offs, bankruptcies, and positive closed accounts with no delinquencies or late payments. This can be due to money being owed or fraud committed by the holder. All these occurrences can stay on your credit report for up to 7 years)
- Public Records (information that may affect your creditworthiness, such as bankruptcies, legal judgments, and registered items. This includes tax liens, which are legal claims by the government that force a person or business to pay their taxes).
- Inquiries (hard inquiries are recorded and will decrease your credit score by a few points. A list of creditors, lenders and other people who have checked your credit will appear on your report. The reason for this is because it’s important to see how often you’ve applied for new credit. If you’ve applied for too many new credit accounts recently, this can be a sign of overspending, making you a risky borrower)
What is the Fair Credit Reporting Act?
The Fair Credit Reporting Act states that consumers are protected if there is inaccurate information on their credit report. So, if you find any incorrect information when examining your own report, you can contact the lender directly. You can also dispute the inaccuracy with either Equifax or TransUnion.
Click here to learn how you can dispute an item on your credit report.
Positive vs. Negative Records
These are reports in which payments were made late, were not made in full, or were not paid altogether. Negative records can stay on your report for up to 7 years.
These include accounts in which payments were on time and in full, with no NSF (non-sufficient funds) cheques or “black marks”. These records have a high credit rating due to their favourable payment history and lack of bad debts. Positive records stay on your credit report longer.
Checking Your Credit Regularly
It’s important to note that not all creditors report to both credit reporting agencies, so it’s possible your credit reports from TransUnion and Equifax are substantially different. You can (and should) check both your credit reports every 6-12 months to ensure the information is accurate and up to date. The good news is, you can now get your credit report and your credit score from any number of companies. Typically, you’ll need to pay a small fee for your credit report but you’ll likely be able to get your credit score for free.
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