Checking your credit rating
Everyone who's ever borrowed money to buy a car or a house, or applied for a credit card or any other personal loan has a credit file. Because we love to borrow money, that means almost every adult Canadian has a credit file. More than 21 million of us have credit reports. And most of us have no idea what's in them.
Finding your credit rating is a necessary step for those looking to purchase a home. Your credit rating has a huge effect on the process, from the type of mortgage you will qualify for, to the interest rate you will be offered. So how can you find your credit rating, and how do you evaluate it? CBC news answers these and several other questions about making sense of your credit report.
There are two major credit companies in Canada that offer you access to your credit report-TransUnion of Canada and Equifax Canada Inc. These companies can give you a detailed breakdown of your credit situation; however, don't assume that each report will be identical. It may be in your best interest to get both to be sure that you are getting the complete picture. Both companies allow you to view your credit report instantly online for a small fee. If you can wait, you can also request a free copy of your report by mail. This will require you to send photocopies of two forms of identification. There are further details on this process online.
When looking over the documents, the first thing to be sure of is that your personal information is accurate. There may be minor spelling mistakes in your name or address, for example, or information about previous mortgages from old addresses. Overall the information should be accurate, and contain no information which does not pertain to you, or looks as if it might be fraudulent.
The second section of the report is the most important. It contains data on all loans you have taken out in the last six years. It also includes the amount you still owe on these loans, what the credit limit is and if you steadily make your payments in full and on time. Each loan is further classified to distinguish between revolving loans or installments, and noted with a number from 0 to 9. The lower the number is the better, as 9 shows that the debt was sent to a collection agency or is classified as “bad debt.”