Do you know what your credit score is?
A credit score is a mathematical formula that translates the data in a credit report into a three-digit number that lenders use to make credit decisions. The numbers go from 300 to 900. The higher the number the better. For example, a number of 750 to 799 is shared by 27 per cent of the population. Statistics show that only two per cent of the borrowers in this category will default on a loan or go bankrupt in the next two years. So that means that anyone with this score is very likely to get that loan or mortgage they’ve applied for.
So whats in a credit report?
A surprising amount of detail, actually. It contains information about every loan you’ve taken out in the last six years – whether you regularly pay on time, how much you owe, what your credit limit is on each account, and a list of authorized credit grantors who have accessed your file. Each of the accounts includes a notation that includes a letter and a number. The letter “R” refers to a revolving debt, while the letter “I” stands for an instalment account. The numbers go from 0 (too new to rate) to 9 (bad debt or placed for collection or bankruptcy.) For a revolving account, an R1 rating is the notation to have. That signifies that you pay your bills within 30 days, or “as agreed.”
How can i get a copy of my credit score?
You can ask for a free copy of your credit report by mail. There are two main credit bureaus in Canada: Equifax Canada
and TransUnion Canada
. Complete details on how to order credit reports are available online. Basically, you have to send in photocopies of two pieces of identification, along with some basic background information. The reports will come back in two to three weeks.
To get your all-important credit score, you’ll have to spend a bit more. Both Equifax and Trans Union offer consumers real-time online access to their credit score (your credit report is also included). Equifax charges $23.95, while TransUnion’s fee is $22.90.
Are there mistakes?
Have you been denied credit and don’t know why? Is someone trying to steal your identity? A simple check of your credit report will probably answer all those questions. And it’s free for the asking. For Equifax, it’s easier to phone 1-800-278-0278, or write the credit reporting agency and tell them you think there’s an error in your file. The credit reporting agency sends along the form you need when it sends you the credit report. Use it to spell out the details of any information you dispute. And there’s a form online, too. Also send along any documents that support your version of the matter in dispute. The reporting agency then contacts whoever submitted the information you’re disputing.
Its important that you revisit your credit bureau score at least once a year. This will allow you to stay on top of what your credit score is as well to check that all other information is correct.
Stay tuned for my next article….”How to repair your credit”?