What Are Credit Reports?
In Canada, there are two credit reporting agencies: Trans Union of Canada and Equifax. Credit reporting agencies do not create your report. Your creditors report your history to the credit bureau who assembles the information for reporting purposes. Credit report will list each creditor on a scale of one (all debts are paid within 30 days) to nine (which indicates a lawsuit, non-payment, skip, consumer proposal, bankruptcy or collection agency). The credit reporting company then tabulates a credit score which is based on the information received from your creditors. A low score may result in your being denied a credit card, bank loan or mortgage. Even if you do get credit, a low credit score may result in a more diligent review of your credit application plus a higher interest rate on the loan. A high credit score makes it easy to obtain credit in a short period of time and at a low interest cost.
You are allowed one free credit report from each of Equifax and Trans Union of Canada each year providing that it is sent to you by regular mail. The report is mailed to you about three weeks from the date they receive your request. You can get a report faster by fax or on the web but there is a charge for this service.
Once you receive your credit report, you should review it for accuracy. If there is an error in the credit report, you must complete the Consumer Update form which will be sent to you with the credit report. Once Equifax or Trans Union receives your Consumer Update form, they will forward your information to the creditor involved and ask the creditor to verify the information that you think is wrong. This will result in the in the information being corrected on your credit report if there is an error. Sometimes the credit bureau will be advised by the creditor that the information is correct – notwithstanding you think it is wrong. If you cannot resolve this, you should request that the credit bureau list this debt as being “in dispute.”
As well as your creditors reporting information to the credit bureaus, you are allowed to add information about yourself as well. For instance, you might have got behind in your payments a few years ago as a result of a period of unemployment or illness. If you are currently applying for a loan or a mortgage, the information of the unemployment or illness (hopefully now you are cured) might be crucial to getting the loan that you want at the interest rate that you deserve. You might also be asked by the credit bureau to update their information on you – i.e. – where you work, where you live, etc. Be careful of giving out too much information on yourself. If you are ever sued by a creditor, they need to know where you live (to serve the legal papers) and where you work (to garnish your wages). Sometimes less information is better.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.