Did you spend more than you could afford over the holidays? If so, right now…
Understanding your credit report and being able to properly navigate the report is essential. This becomes a large part of being able to borrow money from a lender. Having a strong credit score will make the approval process easier as it shows you are good at repaying loans. It also will help determine the type of terms you are likely to receive. Having a better score will improve your chances of receiving a more favourable interest rate. Why is maintaining a healthy credit report in your best interest? Because having a good credit score can translate into thousands of dollars in interest savings over a lifetime.
What IS a Credit Report?
A credit report is created when you start borrowing money or apply for credit and is built up over time. It shows how consistently you have paid off current and past financial obligations. Companies that issue credit cards, lend money, or collect money send information and data about their financial relationship with you to credit reporting agencies, like Equifax and TransUnion Canada. Some of the factors that credit reporting agencies generate a report from are when the account was opened, the timeliness of your payments, and if you have gone over your credit limit. Not only will information about revolving, installment, and collection accounts be sent to these agencies, so will information about other accounts that require paying a full balance each month, such as cell phones and utilities.
Who has access to my Report?
All the information found in your credit report is completely confidential and only you have access to it, so don’t worry! If you want some else to look at your credit report, you must give them permission before they are able to view it. It is common for an organization to need access to your report and check your credit history when applying for a credit card, mortgage, or loan.
You can order your credit report online through a credit reporting agency like Equifax or TransUnion Canada. This is the safest and easiest way to view your report. Experts suggest checking your report once a year so that you can make sure the information is accurate. If there are inaccuracies or if it is not up-to-date, this could affect your interest rates on loans and the ability to open financial accounts. By reviewing your report once a year, it helps keep you aware of your financial situation.
How can I improve my Credit Score?
If you received a score that is lower than you thought, don’t stress! There are many ways that you can improve your score, just know that changes won’t happen overnight. Find out which aspects are negatively influencing your credit score and work on improving them. Are your bills being paid on time? Having one late payment can negatively affect your score for a period of time. Paying your bills on time is an easy way to boost your score! Another way to improve your score is to avoid going over your credit limit by 50% on your credit card.
If you’re reading your credit report for the first time or if your report has a lot of activity, it can be overwhelming and confusing. Don’t let that deter you from checking your report annually and keeping yourself informed. To help you better understand your report, more information can be found at www.equifax.ca or www.transunion.ca. Once you learn how to read it, it becomes simple!
Have more questions, feel free to contact us!