Credit Report and Score Basics: Part 1 of 4

What is a credit report? A summary of your credit history. Your credit history is created when you use a credit card, take out a personal loan, use a “buy now, pay later” offer. Your credit report is created when you borrow money  or apply for credit for the first time.

  • When you opened your account
  • How much money you owe
  • Whether you make your payments on time
  • Whether you miss payments
  • Whether you go over your credit limit

What is a credit score? A 3-digit number calculated using a mathematical formula based on information in your credit report.

+ Points for actions that show lenders you can use credit responsibly.
–  Points for actions that show you have difficulty managing credit.
In Canada, credit scores range from 300-900. 900 is the best score.

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

Why you should care about your credit score Businesses use your credit score and report to determine how risky it would be to lend you money. Lenders may use your credit score to set your interest rate and credit limit.

A high credit score = You may be able to get a lower interest rate on loans, which can save you a lot of money over time.

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

How do I order my credit report and score? Order your free credit report from Equifax Canada and TransUnion Canada at least once a year.

You can pay an optional small fee to get your credit score with your credit report.
Both credit reporting bureaus may have different information about you in their files.
Space out your request for a credit report from both agencies by 6 months – you may be able to detect problems sooner.

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

Information on this site is for informational purposes only and is not intended to provide financial, legal, accounting or tax advice.