Understanding your credit report
Every day, millions of Canadians purchase goods and services using credit. In order to obtain credit, one has to apply for it through a credit grantor, such as a credit card company. Credit grantors base their decision on your past credit history. They can obtain this information from a third party credit reporting agency like Equifax Canada or TransUnion. Your credit history provides credit grantors with very specific information about how you handle your finances.
With CIBC CreditSmart credit report alerts, Equifax Canada will inform you of key changes to your personal Equifax credit report so you can respond immediately to suspicious activity. You can choose to be contacted by phone, e-mail or through a message posted on your CIBC Online Banking Message Centre.
What does the information in my credit record actually mean?
Your credit record is basically a report on how you have managed current and past financial obligations. The better your history, the easier it will be for you to obtain credit. Simply put, your credit record is one of the most important financial tools you have. With a good credit record, buying a new car or home or applying for a credit card becomes much easier. Credit records are held by credit reporting agencies that provide credit reports to financial institutions and other companies that grant credit.
What is an inquiry?
When you apply for credit, it is standard procedure for the credit grantor to first conduct an account inquiry through a credit reporting agency. Organizations also routinely do account inquiries on their client list, in order to monitor client accounts. This second type of inquiry is highly confidential and is not available to other organizations that may offer you credit.
Who has access to my report?
Most businesses and people you are trying to establish a financial relationship with can request a copy of your credit report (subject to your consent). Creditors, insurance companies, some government agencies, employers and landlords can all request a copy. Of course, you can request a copy too, as you have a right to your own credit information. In fact, it's recommended that you obtain a copy of your credit report every 6 months, so you can ensure that all of your information is up-to-date and no fraudulent activity has occurred.
How can I establish and maintain a good credit report?
- Here are some easy-to-follow guidelines that can help you maintain a good credit report:
- Pay at least the minimum payment due to creditors on time every month
- Know the credit limit on all your credit cards, as exceeding limits could affect your credit record
- Don't overextend yourself - the fewer accounts with balances you have, the better your credit record will be
- Don't open up multiple loan accounts or sign up for several credit cards just for the sake of having credit available
- Don't spend income that you hope to receive later
- Avoid transferring balances between credit card accounts unless you really are getting a lower interest rate on the account to which you are transferring your balances
- Take advantage of pre-authorized payment plans so you don't forget to make a payment
- Notify creditors when you move so bills arrive on time and you won't miss a payment
If you are having trouble making payments, most creditors will try and help. The Credit Counselling Canada web site may also be able to help.
Why was I denied credit?
Credit reporting agencies are not the ones that grant or deny a credit application. They simply provide the factual credit history information that credit grantors then use to help make their decision. Each credit granting organization uses different individual criteria for making their decision. In cases where an account/business transaction is joint, both parties are held equally responsible for their credit.
Why is something I have paid off still appearing on my credit report?
Credit grantors are interested in finding out your credit history - good or bad. Your credit report shows your past and present financial transactions, including debt that has been paid in full.
Should I use companies that say they can help fix my credit?
The decision is totally up to you. However, you should know that these companies do not have the authority to remove any information from your credit report.