Building and maintaining a healthy credit report can be a significant step in your financial well-being. Even after you have established a great credit score, you should regularly check your credit report to make sure the information it contains continues to be both positive and accurate.
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Your credit report is your record of creditworthiness and your credit score is a number that summarizes the detailed information in your credit report. Lenders use credit reports and credit scores to evaluate whether or not to grant you credit, how much credit to give you and the annual interest rate for the amount borrowed. In addition, they are used to evaluate your ability to repay loans on a timely basis.
It is easy to build credit, the trick is to build good credit. Establishing and maintaining a good credit report results from paying your bills consistently, on time and as agreed. Always pay at least the total minimum amount due, and always pay on time. Here are some additional tips that may help:
- Pay all your bills on time, such as rent, telephone, utilities, etc.
- Open a chequing or savings account
- Apply for a credit card account or loan
- Avoid missing payments
Equifax Canada and TransUnion Canada maintain information about your credit history and you have a right to see the information that is in your credit file. You can contact these credit reporting agencies to receive a copy of your credit report free of charge by mail or online for a fee. Equifax Canada and TransUnion Canada may have different information about you in their files, so you should order your credit report from both credit reporting agencies at least once per year.
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Your credit report will contain identifying information such as your name, current and previous addresses, social insurance number, telephone number, date of birth and current and previous employers. It will also include your history of paying bills, any information from public records that might affect your creditworthiness (for example, judgments or bankruptcies), information about inquiries made by credit grantors and any other parties you have authorized to receive your credit report, plus any additional relevant information such as banking information or collections information.
A credit score is an objective numerical value, usually ranging from 300 to 900, that summarizes the detailed information in your credit report. Different aspects of your credit report carry different numerical weights and a mathematical formula or computation determines your score. The credit industry applies thousands of score models, with different aspects of your report weighted differently, depending on your payment history and the type of credit being considered.
With credit scores, higher is better. The best thing you can do to maintain a high credit score is to pay your bills on time, limit your debt payments to less than 20% of your income and check your credit report regularly to correct any errors.
Learn more about maintaining good credit at Managing credit. Learn how to repair your credit history at Tackling debt.
If you receive a copy of your credit report and see that it includes incorrect information, or if you have been denied credit on the basis of credit report information you believe to be inaccurate, you can contact the credit reporting agency and request that the information be corrected. They will review your report, investigate your claim and make the correction if one is called for.
Visit External resources for links to Canada's credit agency sites.
Lenders, Landlords, Employers.
Some of the key lifestyle events that may cause a third party to want to review your credit report include:
- Applying for a loan or credit card account
- Renting or buying a home
- Applying for a job
- Applying for a loan to purchase a car, large appliances or electronics