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|Canada’s Office of Consumer Affairs||ic.gc.ca|
|Transunion||transunion.ca||Tel: 1-800-465-7166 (except in Quebec)|
Tel: 1-877-713-3393 (Quebec residents)
Below are some definitions that will help you understand your credit report.
Your credit score is a judgment about your financial health, at a specific point in time. It indicates the risk you represent for lenders, compared with other consumers.
There are many different ways to work out credit scores. The credit-reporting agencies Equifax and TransUnion use a scale from 300 to 900. High scores on this scale are good. The higher your score, the lower the risk for the lender. Lenders may also have their own ways of arriving at credit scores. In addition, lenders must decide on the lowest score you can have and still borrow money from them. They can also use your score to set the interest rate you will pay.
Some credit-reporting agencies report the lenders’ rating of each of your credit history items on a scale of 1 to 9. A rating of “1” means you pay your bills within 30 days of the due date. A rating of “9” means that you never pay your bills at all or that you have made a consumer debt repayment proposal to the lender. A letter will also appear in front of the number: for example, I2, O2, R2. The letter stands for the type of the credit you are using.
- “I” means you were given credit on an installment basis, such as for a car loan, where you borrow money once and repay it in fixed amounts, on a regular basis, for a specific period of time until the loan is paid off.
- “O” means you have open credit such as a line of credit, where you borrow money, as needed, up to a certain limit and the total balance is due at the end of each period. This category may also include student loans, for which the money may not be owing until you are out of school.
- “R” means you have “revolving” credit, where you make regular payments in varying amounts depending on the balance of your account, and can then borrow more money up to your credit limit. Credit cards are a good example of “revolving” credit.
The most common ratings are “R” ratings. These are known as North American Standard Account Ratings and are the most frequently used. The “R” indicates that the item being described involves revolving credit. If you always pay on time, it will be coded an R1. If an amount was written off because you never paid it back, it is coded R9. The R ratings are a coding system that translates “on time”, “one month late”, “two months late”, etc., into two-digit codes.
|R0||Too new to rate; approved but not used.|
|R1||Pays (or paid) within 30 days of payment due date or not over one payment past due.|
|R2||Pays (or paid) in more than 30 days from payment due date, but not more than 60 days, or not more than two payments past due.|
|R3||Pays (or paid) in more than 60 days from payment due date, but not more than 90 days, or not more than three payments past due.|
|R4||Pays (or paid) in more than 90 days from payment due date, but not more than 120 days, or four payments past due Pays (or paid) in more than 90 days from payment due date, but not more than 120 days, or four payments past due.|
|R5||Account is at least 120 days overdue, but is not yet rated “9.|
|R6||This rating does not exist.|
|R7||Making regular payments through a special arrangement to settle your debts.|
|R8||Repossession (voluntary or involuntary return of merchandise).|
|R9||Bad debt; placed for collection; moved without giving a new address or bankruptcy.|
|Other rating indicators that might be found on a report are “I” for installment credit or “O” for open credit line.|
Source: Equifax Canada