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Understanding Your Credit Report
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Your credit report
is a snapshot of your credit history. It is a file recorded
and maintained by credit reporting agencies such as
Equifax Canada
and Trans Union.
Your report is created when your borrow money or are issued any type
of credit card from banks, credit unions, retailers and finance
companies. Among other things, how you repay these loans/cards
with these institutions is reported regularly to the credit
reporting agencies.
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Your Credit Score
Your credit score is
a numerical assessment of your financial health. It's a quick
way for a lender to assess the risk involved in lending to you.
Generally, Canadian credit reporting agencies use a scale of 300-900
where the higher the number the better. The higher your score
the less risk the lenders feel you are. That having been said,
many lenders employ their own internal scoring systems in addition
to that of the credit reporting agencies. These scores play a
large role in what interest rate is applied to your loan.
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Credit Ratings
When reading your
credit file, reporting agencies use various codes to represent the
type of credit you have as well as how well you're paying them.
Next to each lender's name you will find things such as relevant
dates, credit limits, current balances, repayment history and type
of credit ie. credit card (represented by the letter "R" for
revolving credit where the balance can fluctuate) or installment
loan (represented by the letter "I" which are things like car
loans). Less common is the "O" rating which is often used
regarding student loans which may not be due as yet or sometimes for
certain balance-due credit lines.
Here are the primary ratings you will see on your report: |
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R0 |
Too new to rate |
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R1 |
Paid within
30 days of payment due date or not over one payment past due |
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R2 |
Paid more than
30 days from payment due date, or not more than two payments
past due |
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R3 |
Paid more than
60 days from payment due date, or not more than three
payments past due |
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R4 |
Paid more than
90 days from payment due date, or four payments past due. |
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R5 |
Account is at
least 120 days overdue, but not yet rated "9" (see below). |
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R6 |
No such
rating. |
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R7 |
Making regular
payments through a special arrangement to settle your debts
ie. credit counselling or consumer proposal. |
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R8 |
Repossession
(voluntary or involuntary return) ie. vehicle loan |
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R9 |
Bad debt;
written-off account, placed for collection, moved without a
new address or bankruptcy. |
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Depending on the type of trade line (credit type) the letter
"R" can be exchanged for an "O" or "I" as explained above. |
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As you can see, your
credit report provides lenders with a substantial amount of
information regarding your finances. It's very important to
maintain your credit obligations in good standing. If your
good rating slips, many things are affected down the line.
Take the time to review the following credit brochure and good luck!
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Additional Sources: Equifax Canada |
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WHAT PEOPLE ARE
SAYING:
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service Vaughn . Your quickness was outstanding. I will be
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Brampton, Ont.
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Scarborough, Ont. |
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