As a Canadian, maybe you’re in the dark about your credit score. In fact, if you’re like 56 per cent of the country’s adult population, you have never checked your credit score, according to a 2015 survey sponsored by the Bank of Montreal. This finding is astonishing to me.
Credit scores are widely available to many in finance and business who check credit standings before they make decisions that can affect a person’s or a family’s way of life, often in big ways. Since others are keeping tabs on the way you handle money and credit, shouldn’t you stay on top of what it is they are seeing?
You can be sure that Equifax and TransUnion have created a credit report and a credit score in your name.
Others can check up on your credit score through a simple request for information from what are called credit bureaus (also known as credit reporting agencies). In Canada, the two big bureaus include Equifax and TransUnion. They keep track of the way you handle credit and create a history of your financial behaviour through what is called a “credit report,” which forms the basis for your credit score.
If you’ve ever used a credit card, taken out a personal loan, or joined any sort of “buy now, pay later” plan – among other ways to borrow – you can be sure that Equifax and TransUnion have created a credit report and a credit score in your name.
Your score provides a snapshot of your credit worthiness in the form of a numbered ranking.
Your credit score is the big highlight of your credit report. Your score provides a snapshot of your credit worthiness in the form of a numbered ranking. It is tallied not only by the credit bureaus but by lenders, too. If your score is low, you may run into trouble borrowing or applying for something. If that’s the case, getting credit counselling from a qualified, not-for-profit agency such as Credit Canada should become a priority.
Credit scores consist of three-digit numbers that show whether you are a good or a bad credit risk: Scores range from 300 (for very bad, high-risk folks), to 900 (for very good, low-risk individuals). You raise your score when you show lenders that you can use credit wisely. Your score drops when you show difficulty managing credit. Your score changes over time as your credit report is updated.
Credit score charts look something like this:
Credit Score Quality
|300 to 559| Poor
|560 to 659| Fair
|660 to 724| Good
|725 to 759| Very good
By law, credit bureaus can sell credit reports to banks, credit unions, and other financial institutions, credit card companies, auto leasing companies, and retailers. In addition, for assurance that you are trustworthy, other organizations are allowed to view your credit history and credit score. These organizations include mobile phone companies, governments, employers, landlords, and in some cases insurance companies (rules vary somewhat across Canada).
Get all the details about credit reports and credit scores; start by visiting a Web site chock full of information.
As the Government of Canada points out, “Usually, when you sign an application for credit, you allow the lender to access your credit report. Your consent generally lets the lender use your credit report when you first apply and anytime afterward while your account is open. In many cases, your consent also lets the lender share information about you with the credit reporting agencies if your application is approved.”
I strongly encourage you to get all the details about credit reports and credit scores; start by visiting a Web site chock full of information from the Financial Consumer Agency of Canada (FCAC). The Web site also provides information about how you can get your credit report free by snail mail, or how you can access it online for a nominal fee. Visit FCAC here