Credit Report Basics

1. What Information is in my Credit Bureau?
2. Your Credit Score
3. How can I improve my Credit Score?
4. How do I correct inaccurate information on my credit bureau?
5. How is information in my credit report used?
6. Who can access my credit report?

Your credit report is one of the most important parts of the mortgage application. A client with an excellent report can have access to all the mortgage programs and best rates. A credit report is a history of how consistently you pay your financial obligations and it starts when you first borrow money or apply for credit. Companies that lend money or issue credit cards to you (banks, finance companies, credit unions, retailers, etc.) send the credit reporting agencies specific and factual information about their financial relationship with you. Information including - when you opened up your account, if you make your payments on time, if you miss a payment, or if you have gone over your credit limit, etc.

The credit bureau companies, Equifax Canada or Trans Union, receives this information directly from the financial and retail institutions, and retains it to help other lenders make decisions about granting you credit. The financial and retail institutions update individual credit reports regularly by providing information to credit reporting agencies about their customers' credit and payment activities. This ensures that credit reports remain up-to-date and are as complete as possible.

What Information is in my Credit Bureau?

Personal identification and employment history - Includes key identification information, such as your name, address and previous address, date of birth, employment history and Social Insurance Number (SIN).

Inquires – A list of businesses that have looked at your credit history along with the date they pulled your credit bureau in the last three years.

Public Records - Contains information about secured loans, bankruptcies and/or judgments.

Consumer Statement - Allows you, the consumer, to add a brief comment about any information in your report.

Payment history - Provides details of your credit accounts, when you opened the account, last used the account, the balance, the limit, and most importantly, if your payments are made on time.

Your Credit Score

A credit score is a three-digit score that is computed by personal information from your credit report and other sources. The scores range from approximately 300 to 900. The higher your score, the more credit worthiness you are.

Here is a chart of how most financial institutions will break up the credit scores. Please keep in mind that Integrity Mortgage does have access to alternative lenders that deal with tarnished credit.

How can I improve my Credit Score?

Credit scoring models are complex and often vary among creditors and for different types of credit. If one factor changes, your score may change, but improvement generally depends on how that factor relates to other factors considered by the model. Only the creditor can explain what might improve your score under the particular model used to evaluate your credit application.

Nevertheless, scoring models generally evaluate the following types of information in your credit report:

• Have you paid your bills on time? Payment history typically is a significant factor. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report.
• What is your outstanding debt? Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score.
• How long is your credit history? Generally, models consider the length of your credit track record. An insufficient credit history may have an effect on your score, but that can be offset by other factors, such as timely payments and low balances.
• Have you applied for new credit recently? Many scoring models consider whether you have applied for credit recently by looking at "inquiries" on your credit report when you apply for credit. If you have applied for too many new accounts recently, this may negatively affect your score. However, not all inquiries are counted. Inquiries by creditors who are monitoring your account or looking at credit reports to make "prescreened" credit offers are not counted.
• How many and what types of credit accounts do you have? Although it is generally good to have established credit accounts, too many credit card accounts may have a negative effect on your score. In addition, many models consider the type of credit accounts you have. For example, under some scoring models, loans from finance companies may negatively affect your credit score.

Scoring models may be based on more than just information in your credit report. For example, the model may consider information from your credit application as well: your job or occupation, length of employment, or whether you own a home.

To improve your credit score under most models, concentrate on paying your bills on time, paying down outstanding balances, and not taking on new debt. It's likely to take some time to improve your score significantly.

How do I correct inaccurate information on my credit bureau?

It is important that you review your credit report on an annual basis to make sure all information reporting is correct. Any incorrect negative reporting will have a negative effect on your score therefore, it is imperative that this information is corrected. You have the right to dispute any discrepancies by immediately notifying the credit reporting agency. Integrity Mortgage uses Equifax, in which you will have to fill out a Consumer Credit Report Update Form. You can fax or mail the completed form to the address below:

National Consumer Relations

Equifax Canada Inc.

Box 190

Station Jean-Talon

Montreal , Quebec

H1S 2Z2

Facsimile: (514) 355-8502

Equifax phone number is: 1-800-465-7166

We encourage all consumers to request and review their credit report on a regular basis. By doing this, you can ensure that your report contains information that accurately reflects your credit history. You have the right to dispute any discrepancies by immediately notifying the credit reporting agency.

How is information in my credit report used?

There are two major credit reporting agencies in Canada : Equifax Canada Inc., and TransUnion of Canada. Governed by provincial and federal laws, credit reporting agencies store and maintain credit information about individual Canadian consumers for use by members of the credit reporting agency. Members include banks, finance companies, auto leasing companies, credit card companies, and retailers.

Who can access my credit report?

A company or individual may only obtain a copy of your credit report with your consent or after informing you that they will be reviewing your report. Additionally, an individual or company must have a legitimate business reason and a permissible purpose, as stated in government regulations, to obtain your credit report. Federal and provincial laws are very specific regarding who can review your credit report and for what purpose.

Anytime you apply for a loan or credit, an application is filled out which normally includes written consent, giving permission to the credit grantor to check your credit report when you first apply, and throughout the life of the account. The credit report not only helps determine if you are credit worthy, it also is used as a verification tool. The report can be matched up with the application to confirm accuracy on current address, employment, date of birth, along with other personal information.

A credit reporting agency may only provide a copy of your report when the request relates to the extension of credit, collection of a debt, housing rental, or an application for employment or insurance purposes. Since your credit report contains only factual information, it is important to remember that each of the companies requesting your credit report will interpret those facts in its own way to arrive at a decision.