Credit Report and Score Basics: Part 3 of 4

How do I understand my credit report? Each account shown on your Credit Report will have a rating that reflects the current payment status of the account. This number will be between 0 and 9 and only describe the current payment status, as shown below.

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Source: Credit Canada: How to Improve your Credit Score

How to re-build credit history

  • Apply for a secure credit card: Requires that you pay a deposit that is usually equivalent to the credit card limit. After you prove that you can pay the balance regularly and have built a payment history, you can request the security requirement to be dropped and the deposit be returned.

Source: Understanding your credit report and credit score (Financial Consumer Agency of Canada)

  • Make at least the minimum payment by the due date: If you cannot pay off your full balance each month, pay the minimum for each of your debts on time.

Source: Understanding your credit report and credit score (Financial Consumer Agency of Canada)

credit-score-part3Do not apply for too many credit and loan products: Too much credit can negatively effect your credit report. Aim to use less than 35 percent of your available credit.

  • Do not apply for credit and loans too frequently because every time you do, your credit history is checked and each credit check can affect your credit score.
  • Review your monthly statements: Ensure your monthly statements are correct and you have not been charged for something in error. Report any mistakes as soon as possible.
  • Check your credit report: Order a free copy of your credit report from one or both of Canada’s two credit rating agencies, Equifax and TransUnion. Bear in mind that each agency may have different information about you in their files, so check your credit report from both agencies at least once a year for possible errors and get them corrected as soon as possible. Consider requesting your report from one agency and then waiting six months before you order from the other agency. By spacing out your requests this way, you may be able to detect any problems sooner. Don’t bounce cheques – Your bank might report this to credit agencies.

How to maintain credit history

Consider ordering a credit report as part of your yearly financial health check-up. Review your Credit Report at least once a year to ensure information about your credit history and your personal information are accurate. Remember to pay your bills on time and do not apply for too much credit in a short period of time, as too much credit can have a negative implication for your credit history. Finally, don’t bounce cheques because your bank might report this to credit bureaus.

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Source: Credit Canada: How to Improve your Credit Score

Source: Understanding your credit report and credit score (Financial Consumer Agency of Canada)