How to Understand Your Canadian Credit Report

3 November 2014

Credit reports can seem intimidating and difficult to interpret, but it’s important that you take the time to understand what they mean. The reports are really just a record of your financial activity through the years, including your credit card debts and payments, as well as any loans and mortgages you’ve taken on. This is wonderful information to have, because it allows you to view your history as a creditor would.

The information on your credit report can allow you to be approved for a credit card or a loan and can change how much interest you pay. Keeping your score high and running regular Canadian credit checks is important and can give you invaluable peace of mind.

Here are some things to keep in mind that might help you interpret your Canadian credit report:

  • Length of credit history: Lenders believe that the longer you’ve had good credit, the more likely you will be able to maintain good credit. Start building good habits now so you can lean on a long credit history in the future.
  • New credit: Opening several new lines of credit at once can lower your rating, so be wary of doing so. Instead, open only one new line of credit at a time.
  • Payment history: It’s best to have a lengthy history of payments made on time. Check your report to see if you’ve ever missed a payment, or if you have a habit of carrying credit card debt over from month to month. This is important, because creditors want to see that you pay back your loans in a timely and responsible way.
  • The amount you owe: Your credit card debt is taken into account along with your credit limits, so take a look at how you much owe from month to month and whether or not you ever approach your spending limit. Lenders tend to view someone close to maxing out their cards as a risky investment.
  • Who is interested: Banks and landlords, for instance, want to know if they can depend on you to make payments on time and as agreed. One quick way to do this is check your credit report, which reflects your loan history. How you treat previous lenders may help indicate to others about how you’ll treat future ones as well.
  • Your credit errors: If a potential lender declines an application because of your credit score, or charges you a higher-than-average fee, you then know that something in your report is making you seem like a risky investment. Ordering a credit report is the first step to take when you have questions about your financial future. Also, don’t be afraid to contact your credit bureau if you think there’s a mistake on your report.

For a free credit check, you can obtain your credit report by requesting a copy from the Canadian credit bureaus, TransUnion Canada or Equifax Canada. If you need to receive your report quickly, though, you also have the option of paying for a copy of your credit report, so that you can review it as soon as possible and finally get a full picture of your own financial history.