Credit report

A credit report is a detailed report of your credit history and is kept by at least one of Canada's credit-reporting agencies. Your credit file is created when you first borrow money or apply for credit. On a regular basis, companies that lend money or issue credit cards to you, including banks, finance companies, credit unions, retailers, send specific factual information related to the financial transactions they have with you to credit reporting agencies. The contents of your credit report influence your credit score, which is a number that indicates the risk you represent for lenders, and may influence if you get credit or not, and at what interest rate.

This article dicusses credit scores, then looks at how to obtain your credit report, which should be done regularly to make sure that the information is correct and to check for identity fraud.

Credit reporting agencies
Two major credit reporting agencies operate in Canada, Equifax and TransUnion Canada.

Credit score
Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers.

Why your credit score matters
Reasons why maintaining a good credit score are important include:
 * Lenders such as credit card issuers, those offering car loans and mortgage lenders will consider your credit score to decide if they are willing to loan you money at at what rate
 * Your score may be used by "insurance companies, landlords and employers... to see how financially responsible you are before issuing an insurance policy, renting out an apartment or giving you a job".

What influences your credit score?
There are many different ways to work out credit scores. The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores.

According to the Financial Consumer Agency of Canada (FCAC), factors that may affect your credit score include:
 * how long you’ve had credit
 * how long each credit has been in your report
 * if you carry a balance on your credit cards
 * if you regularly miss payments
 * the amount of your outstanding debts
 * being close to, at or above your credit limit
 * the number of recent credit applications
 * the type of credit you’re using
 * if your debts have been sent to a collection agency
 * any record of insolvency or bankruptcy

Access to your credit report
You have the right to see your credit report. No one else can have access to the information in your report unless you allow it. Generally loan, mortgage and credit card applications include a clause that allows the financial institution the right to access the information in your credit report.

Checking your credit report and credit score
It’s a good idea to request a copy of your credit report from the two credit-reporting agencies at least once a year to verify that your personal information is up to date, that your financial information is correct, and to ensure that you have not been the victim of identity fraud. Ordering your own credit report has no effect on your credit score.

A trick is to order one report every four to six months, alternating between the two agencies. This way, problems such as identity fraud may be detected sooner.

By mail
If you make your request in writing and send it by mail, the credit-reporting agencies will provide you, by mail, with a free copy of your report. It is important, however, that in your request you include a copy of two pieces of I.D. Contact the credit-reporting agencies to find out which pieces of I.D. are acceptable.
 * Equifax - free credit report
 * TransUnion Consumer disclosure - free credit report

You cannot obtain your credit score via a request in writing.

By phone
You can call Equifax (1-800-465-7166) and TransUnion (1-800-663-9980, or 1-877-713-3393 for Quebec residents) directly. They both have an automated system where you answer identifying questions. The process takes less than five minutes and they will send you a copy of the credit report in the mail.

From the agencies
You can also order your credit report through the reporting agencies’ websites. This method is faster since you will receive your credit report online only a few minutes after you made the request. However, credit-reporting agencies charge a fee for providing you with an online copy of your credit report.

The only way you can obtain your credit score is online, through the credit reporting agencies’ websites. The fee charged for your credit score might be higher than the cost of receiving only your credit report online. However, the cost of your credit score will include an online copy of your credit report.

From a third party
You may be offered your credit score from a third party (a company other than the credit-reporting agencies), either for free or in exchange for signing up to a paid service. The Financial Consumer Agency of Canada (FCAC) makes the following recommendations:

Correcting errors
If you find errors in your credit report, you should first contact the credit-reporting agency. You should also contact the financial institution that provided the incorrect information.