a printed credit report on a desk table beside glasses and a keyboard

Understanding Your Credit Report

Simply put, your credit report is a summary of your financial history. Lenders require this document to help them determine whether or not they should grant you credit, funding or a loan. Understanding how credits report work is crucial, so here’s what you should know.

What’s on your credit report

Your credit report contains information about some aspects of your life, but it makes no mention of your ethnicity, income, purchases paid in full, medical history or criminal record. Here’s what’s included on it instead:

  • Basic identification, such as name, address, social insurance number and employment history
  • Credit payment history, consisting of a list of payments you’ve made to creditors
  • Public records such as bankruptcies, arrests and other things that may impact your credit application
  • A list of recent inquiries made by creditors

Each item on your credit report is assigned a rating from 1 to 9. 1 means all payments were made on time, while 7 indicates that payments weren’t made or that a consumer proposal was submitted, and a bankruptcy appears as 9.

 

Negative aspects

Negative information will stay on your credit report for up to six years, although there are exceptions. When lenders evaluate your credit report, the first things they’ll look at are payment history and existing debt. Those tend to carry the most weight when determining whether to lend you money. Late and missed payments will make it harder for you to get credit, as will bankruptcies.

 

Things to look out for

Considering the fact your credit report is both a complete record of your financial activity and one of the main things lenders use to assess your credit application, its accuracy is extremely important. Here are some types of mistakes that you should look out for:

  • Errors in your personal information
  • Errors in accounts and credit cards, such as payments that you made on time but are reported as being late
  • The presence of negative information (missed payments, consumer proposal, bankruptcy) that should have been removed
  • The presence of accounts you never opened, suggesting identity theft and fraud

A mistake on your report can be corrected by credit bureaus simply by gathering all the relevant documentation and filling out the required forms. This service is free.

If the creditor agrees there’s been a mistake, the correction will be made. If they don’t, you can make a complaint, attach a consumer statement to your report or file a grievance about the credit bureau itself.

 

Need help? Speak with a Licensed Insolvency Trustee Today!

Fox-Miles & Associates Inc. can help you gain your financial independence back. Whether you need a credit counselling service or are considering filing for bankruptcy, a licensed insolvency trustee will help you understand your situation and your options. Contact us today to set up a free consultation or visit one of our offices in Edmonton, Fort Saskatchewan, Spruce Grove or St. Albert.

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