Understanding Credit Reports

A credit report is a summary of your credit history that acts as the main deciding factor that lenders use to determine if you qualify for a loan. Every individual’s credit history is recorded in files that are maintained by one or more of Canada's leading credit report agencies. You are the only person who has access to this report, and institutions can run credit checks only with authorization to do so. In order to qualify for a loan, mortgage, credit card, certain types of insurance, and other forms of credit lending you may need to get a credit check.

Your credit report contains a complete history of your financial situation. Each report consists of personal information, credit information, banking information, public records, collection information, credit report inquiries, and past consumer statements. In the personal information section you will find your full legal name, past and present addresses, telephone numbers, date of birth, social insurance number, and a history of recorded employment. The credit information section notes any credit that you have ever had such as loans, credit cards, mortgages, and lines of credit. The banking information portion provides personal banking information such as accounts held and any NSF marks or cheques written which have bounced. The public records sector of the report includes information on the public record such as bankruptcy or court judgments dealing with your personal credit. If any debts have ever gone to a collections agency they will be recorded in the collection information segment of your credit report. Consumer statements will also appear and indicate any statements that have been made such as fraud warnings or disputes with financial institutions. Finally, credit report inquiries list any inquiries that have been made about your credit. This includes those made by financial institutions, lenders, or any other organizations that may have run a credit check. From analyzing all the information contained in these reports, the credit report agencies rate your credit by giving you a score.

Many people underestimate the importance of carrying a good credit rating. Think of the report as a snap shot of your financial reputation that indicates the level of risk borrowers undertake by lending money to you. Your rating is almost always the deciding factor in being approved for loans or even apartment, condo, and housing rentals. Running an annual credit check for your own records is also highly recommended. Yearly credit reports give peace of mind that you have not been a victim of identity theft which is a fast growing crime in Canada. Annual checks also allow people to gain a familiarity and understanding in regards to what is being recorded on their report. This lends the opportunity to fix any bad ratings or discrepancies that may have appeared over the last year.