 What
is Credit Reporting?
Many people
don’t realize how important it is to maintain a good credit rating. Nor
do they understand what is involved in achieving this.
The first
step is to review your own individual credit bureau. You can contact your
local credit bureau for a copy of this usually for a nominal fee.
One thing
to note when ordering, there are two types of credit reports that can be
requested; with or without your credit score (beacon score). It is
more useful to order the version with the beacon score as this number plays
a major role in the credit granting decision and can help you to determine
if further steps need to be taken to improve your credit.
In Canada
there are two major credit bureaus – Equifax
and Trans Union.
Each of these companies can provide you with a copy of your individual
credit report.
Once you
have a copy of your credit report there are few things that should be checked.
-
wrong mailing
addresses
-
incorrect
social insurance number
-
signs of
identity theft
-
errors in
your credit accounts
-
late payments
-
unauthorized
hard enquiries
The hard
inquiries, done when you apply for new credit, can affect your credit
score while soft inquiries, done by your existing creditors, requesting
an update of your information, do not affect your score.
What
is a Beacon Score?
Your beacon
score is a predictive credit worthiness score . It forecasts the credit
behavior of an individual for 2 years and ranges from 300 to 900.The higher
the score the better it is for you.
For unsecured
credit, lenders typically look for a score above 620. For mortgage
lending, a credit score below 600 may subject your application to tighter
scrutiny or higher interest rates and/or fees.
How
long do items report on my credit report?
Inquiries
remain on your report for three years after the date of inquiry. Your credit
information remains for six years from the activity date.
Consumer
proposals will remain on your report for 3 years while the first bankruptcy
reports stay for 7 years. Should you be unfortunate enough to declare bankruptcy
twice or more, the second and subsequent times will remain on your report
for 14 years each.
You can
see how credit abuse can impede your ability to obtain credit in the future.
What
about credit repair?
-
Never pay
for these services
-
Only responsible
credit practices over time can improve poor credit history.
-
Ensure timely
payments with pre-authorized withdrawals
-
Re-establish
credit as soon as possible after being discharged from bankruptcy
-
If necessary
obtain secured credit in order to re establish credit, credit card loan
or line of credit
Identity
fraud/theft is the single most increasing crime in Canada - protect yourself!
Review your credit report regularly.
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