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Credit Reports & Credit Scores

There’s more to a credit report than just your credit score.

Credit Reports

A credit report is a detailed report of information gathered by credit bureaus on an individual’s credit history (e.g., bill-paying habits and type of credit previous used). Credit reports are used by creditors, like banks and lending companies, to evaluate your creditworthiness – your suitability for the granting of credit.

How to Access Your Credit Report

There are two major Credit Bureaus in Canada: Equifax Canada and TransUnion Canada. You can also access your credit report online for free via Credit Karma and Borrowell.

Although there are many ways to order your credit report, the easiest and safest method is by mail or by the internet. When applying for a credit report online, make sure you are using a secure and reputable site to protect your personal information.

Credit Report Structure

A credit report is divided into several sections including:

  •         Personal information (name, address, SIN, etc.)
  •         Credit inquiries (employers, landlords and credit agencies who check your report)
  •         Credit history (number and types of credit account past and present, balances, etc.)
  •         Public records

It is important that you review each section carefully to ensure there are no mistakes. We recommend receiving a credit report from all or more than one credit bureau, to ensure there are no mistakes on your report.

Credit Report Terminology

  • Installment credit (I). A loan for a set amount to be paid back with specific payment amounts over a specific period of time. Indicated by an “I” on your report. Car leases are included here.
  • Revolving credit (R). A credit card where you charge and pay regularly and on time to establish a credit history. Indicated by an “R” on your report.
  • Open credit (O). A line of credit which allows you to use up to a set amount of money without having to request a loan from the bank. Indicated by an “O” on your report.

Rating Indicators

Rating Indicators are number values assigned that reflect your payment history for individual creditors. A good credit rating to strive for would be I1 or R1 or O1.

0 – Too new to rate; approved but not used.

1 – Paid within 30 days of the due date or paid as agreed.

2 – Paid within 31-60 days from the due date or not more than two payments past due.

3 – Paid within 61-90 days from the due date or not more than three payments past due.

4 – Paid within 91-120 days from the due date or not more than four payments past due.

5 – Account is at least 120 overdue, but is not yet rated “9”.

6 – Code not used.

7 – Making regular payments through a special arrangement to settle your debts. Proposals are recorded here.

8 – Repossession (the voluntary or involuntary return of merchandise).

9 – Bad debt; placed for collection; or moved without giving a new address. Bankruptcies are recorded here.

The Importance of Reviewing Your Credit Report

Mistakes on credit reports are common and could hinder your chances of receiving credit in the future. It’s important to carefully review all areas of your report and address any errors with the credit bureaus. Dispute forms are available on their websites (Equifax & TransUnion).

Remember: You are responsible for your credit report and should check it regularly. The rule of thumb is to check it on a yearly basis.

Retention Period of Data on a Credit Report

Information from various credit scores remains on your credit report for different lengths of time.

  • Credit Inquiries. Three (3) years from the date of the inquiry. The system will keep a minimum of five (5) inquiries.
  • Voluntary deposit, orderly payment of debts or credit counselling. Three (3) years from the date of full payment.
  • Registered consumer proposal. Three (3) years from the date it is fully performed.
  • Credit history. A credit transaction will automatically purge seven (7) years from the date of last activity.
  • Bankruptcy. Six (6) or seven (7) years* from the date of discharge, depending on the province in which you filed. If more than one bankruptcy is declared, the system will keep each bankruptcy for fourteen (14) years from the date of each discharge.

*6 years in AB, BC, MB, NS, NU, NWT, SK, and YT; 7 years in NB, NL, ON, QB, and PEI.

Credit Scores

A credit score is a three-digit number generated based on your credit report that provides a snapshot of your creditworthiness.  It is used by lenders to determine the risks associated with granting credit to you. Generally, in Canada, credit scores range from 300 to 900. The higher your credit score, the higher your creditworthiness.

Credit Score Chart, Grant Thornton Limited

Factors Impacting your Credit Score

Payment History

  • Shows your payment history for each debt.
  • Your score is negatively affected if you’re late with payments or you’re not making payments as agreed.
  • Recent late payments hurt more than older late payments.

Outstanding Debts

  • Your credit score can be affected by the level of debt you carry and by the portion of available credit you use.
  • High levels of debt compared to your income will negatively affect your score.
  • Being close to your credit limits on available credit will negatively affect your score.
  • Having low balances compared to available credit on two debts is better than having a high balance on one.
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