What to Look For In Your Credit Report

27 October 2014

One of the best things you can do for your financial security is check your credit report on a regular basis. If you don't know what to look for or what certain items mean, this can seem overwhelming and intimidating. To get you started with confidence, here is how a credit report breaks down and what you should look for.

  • Negative items: Accounts listed under this heading are ones that haven't been paid as initially agreed, meaning your bills are being paid late or not at all. Pay careful attention to this section, as this is where you are most likely to find credit cards or loans that you didn't open. If there are inaccurate accounts listed, this could be hurting your credit score and you'll want to dispute the report and get the accounts removed.
    • Record of requests: This area of the report will include all inquiries made into your credit. Hard inquiries are ones made by potential creditors and will affect your credit score for one year, remaining on your report for two. Soft inquiries are credit checks done by yourself, and these don't affect your score in any way. When reading this section, make sure that any hard inquiries were authorized by you. These might include an inquiry by your landlord, or an application for a loan for example.
      • Accounts in good standing: Most of your credit report will be listed under this heading, provided you've had good financial habits. Make sure all your accounts are listed and that all your payments are recorded as expected. Remember, a credit report is a snapshot of one moment in time so don't worry if the page shows balances you've paid, because the data for the report could have been collected before you made the payment. Then, check that your credit limits are accurate, because this number affects your credit utilization ratio, which reflects how much of your available credit line you use. Your utilization ratio can play a role when creditors determine whether or not to issue you new lines of credit, just like your credit score.
        • Personal Information: Under the "Personal Information" listing, be sure to confirm that there aren't any new, inaccurate addresses. If there are, it could mean that someone is trying to steal your identity. Thieves may apply for new credit lines with your information but their own address. By doing this they hope to receive all bills and statements, thus avoiding quick detection on your part.

        If your credit report contains inaccuracies, dispute the item as soon as possible. Send a written dispute letter as well as relevant documentation to both credit bureaus, Equifax Canada and TransUnion Canada, and follow up if you haven't seen a correction made within 30 days.

        One simple error has the power to lower your credit score, which could prevent you from getting the loan you need in the future. Take control of your financial future and protect yourself by regularly reviewing your credit report. Credit monitoring services can also help you do this, by alerting you to changes in your credit as they happen, providing you with a little extra peace of mind.