Credit Bureaus collect information on your credit and debt payment history. Based on this information, they assign you a rating number that directly affects your ability to get credit, loans or mortgages — now and in the future.
How your credit score works
These days, having a good credit score is important for more than just getting a loan. Landlords, insurance companies and employers are placing more emphasis on a person’s credit score when deciding whether to rent them an apartment, offer lower-cost insurance, or give them a job.
The FICO score, which is the basis for most credit scores, consists of 5 major categories: your payment history (35% of score total), debt amounts (30%), the length of your credit history (15%), the types of credit you use (10%), and whether you’ve opened any new credit accounts recently (10%). These categories are factored into a score ranging from 300 to 900 points, with 900 being the best score possible. Lenders generally consider you a good credit risk if your score falls between 660 and 724. Anything below 560 is considered poor.
To Maintain a Strong Credit Rating:
- Pay bills on time
- Only have 1 or 2 credit cards
- Try to keep a zero balance on credit cards – keep balance below 75% of limit
- Maintain a lower debt to income ratio
What are the credit ratings?
GUIDE FOR CONSUMER CREDIT
|Usual Manner of Payment||Rating|
|Too new to rate; approved, but not used.||0|
|Paid within 30 days of billing; pays accounts as agreed.||1|
|Paid in more than 30 days, but not more than 60 days or one payment past due.||2|
|Paid in more than 60 days, but not more than 90 days or 2 payments past due.||3|
|Paid in more than 90 days, but not more than 120 days or 3 payments past due.||4|
|Account is at least 120 days overdue but is not yet in collections.||5|
|Account paid through an orderly payment of debt program or consumer proposal.||7|
|Bad debt, account placed for collection, settlement, bankruptcy.||9|
**There is no ‘6’ rating.
TERMS OF SALE
O = Open Account (account on which the balance has to be paid at the end of each month)
R = Revolving or Option Account (regular credit card)
I = Installment (all types of loans)
How do I obtain a copy of my credit bureau report?
There are two credit bureaus in Canada: Equifax Canada and TransUnion Canada. You may obtain a free report from one or both of the credit bureaus.
Requests can be made by mail. Equifax will also accept requests by fax.
You can obtain a Credit Report instantly online from either company, however there is a fee for this service.
P.O. Box 190 Station Jean-Talon
Montreal, Quebec H1S 2Z2
P.O. Box 338 LCD 1
Hamilton, Ontario L8L 7W2
When writing to them, include the following information:
- Full name and former name (if applicable)
- Current address and previous address
- Date of birth
- Social insurance number
- Photocopies of two pieces of identification
- Daytime phone number where you can be reached