Understanding Your Credit Report
Below is a collection of resources to help you with your credit.
- Get a free copy of your Equifax Credit Report
- Get a free copy of your Transunion Credit Report
- Consumer Credit File: Understanding The Ratings
- How Credit Scores Are Calculated
- Steps To Improve Your Credit
- Re-establishing Your Credit After Bankruptcy
Free Equifax Credit Report
There are four ways to obtain a copy of your free Equifax credit report.
1) Phone 514-493-2314 or 1-800-465-7166 to request a copy of your report.
2) Mail a written request with copies of two pieces of identification to:
Equifax Canada Inc.
Consumer Relations Department
Box 190 Jean Talon Station
3) Fax a written request with copies of two pieces of identification to: 514-355-8502
4) Email a request to: email@example.com
Free Transunion Credit Report
You can also request a copy of your free Transunion credit report.
You are allowed to obtain 1 credit report free each year from each company. Obtaining a copy of your credit file on a regular basis is an important step in managing your credit situation.
Consumer Credit File: Payment Ratings
“R” means “REVOLVING or OPTION” (open – end account; ie credit cards)
“I” means “INSTALLMENT” (fixed number of payments; ie leases or loans)
R0 – I0 – Too new to rate; approved but not used
R1 – I1 – Paid within 30 days of payment due date or not over one payment past due
R2 – I2 – Pays (or paid) in more than 30 days from payment due date, but not more than 60 days, or not more than two payments past due
R3 – I3 – Pays (or paid) in more than 60 days from payment date, but not more than 90 days, or not more than three payments past due
R4 – I4 – Pays (or paid) in more than 90 days from payment due date, but not more than 120 days, or four payments past due
R5 – I5 – Account is at least 120 days overdue but is not yet rated 9
R7 – I7 – Making regular payments under a consolidation order or similar arrangement (i.e. Credit Counselling through Third Party)
R8 – I8 – Repossession (voluntary or involuntary return of merchandise).
R9 – I9 – Bad debt; placed for collection.
How Credit Scores Are Calculated
Payment history is 35%
Bankruptcies, late payments, past due accounts and wage attachments.
Amounts owed is 30%
Amount owed on accounts, proportion of balances to total credit limits. It has been rumored that carrying less then 35% of the maximum amount of credit available on an account is advantageous. Anything about that amount could weaken your credit score.
Length of credit history is 15%
Time since accounts opened, time since account activity.
New credit is 10%
Number of recent credit inquiries, number of recently opened accounts.
Types of credit is 10%
Number of various types of accounts (credit cards, retail accounts, mortgage).
Steps To Improve Your Credit
1. Order a copy of your credit report. Review it carefully and correct any significant errors.
2. Pay your bills on time.
3. If you have a questionable credit history, open a few new credit accounts, use them responsibly, and pay them off on time.
4. Don’t open credit accounts you don’t intend to use. Having five or six of the same type of credit card (Visa, for example) does not work in your favour.
5. Note that having a credit card or instalment loan can help boost your score, so long as you don’t have too high a balance and you pay it off in a timely manner.
6. Keep your balance low in relation to your available credit. If your credit limit is $10,000, keeping your balance below $2,500 (or 25 per cent of your limit) will improve your score.
7. Pay off your credit card debt instead of moving it around to lower rate cards. Moving balances to other credit cards (called a “balance transfer”) and closing out the old account can hurt your score.
Re-establishing Your Credit After Bankruptcy
Re-establishing your credit. Obtaining a credit card 1 year after a bankruptcy can sometimes be a tricky task. I would highly recommend obtaining a secured credit card. A secured credit card is just like a regular credit card, however for every $1 you put down as a deposit, you will get $1 in credit. There is virtually no risk to the issuer so you are almost guaranteed to be approved. This will help to build that re-established credit that will be required when it comes time to applying for a mortgage.
Here are a couple of companies that issue secured credit cards.
Capital One – minimum $75-$300 deposit required
Peoples Trust – minimum $500 deposit required