Find Out What Is On Your Credit Report

Your credit report is made up of 4 main sections. Here is a basic outline of each section and how they impact your credit score. 

Personal Information - This is information like your first and last name, SIN, date of birth, last known addresses, the date your credit report was created etc… Impacts: If you change residences often or use different addresses on your credit report, this will negatively impact your Beacon Score as it demonstrates instability. 

Inquiries - These are all the companies that viewed your credit report. Impacts: If you make more than 4 applications for credit in one calendar year it will have a seriously negative impact to your Beacon Score. 

Secured Liens, Collection Items, Bankruptcy, Consumer Proposals, Judgements - When you take out a secured loan and a lien is registered against your property, the information will appear here. This is also the section where any collection accounts or past bankruptcy/consumer proposal will be recorded. Impacts: A bankruptcy will result in your Beacon Score being reduced to an "R – reject beacon" until you are discharged. Consumer proposals, credit counselling and collection accounts will devastate your Beacon Score. Many people get confused and think a consumer proposal or credit counselling is a debt consolidation that reflects positively on their credit. It is not! 

Trade Lines - This is where your creditors will list any credit accounts you hold with them. They will list the company name, the date you opened the account, the opening credit limit, the balance, the monthly payment, your payment history, the number of months they have reported the account to the credit report, the number of times you have been 30, 60, 90 days in arrears, the date of last activity on your account, and the last date that they reported information to your credit report. Impacts: Late payments will obviously negatively impact your Beacon Score but there are many other aspects of your credit history that will severely impact your Beacon Score. One example is accruing a credit limit that is close to or exceeds your credit limit. So does closing a credit account with a balance and then making monthly payments. 

The Rating System - There are 2 main types of credit products that report to the credit report, instalment credit (personal loans and card loans) and revolving credit (lines of credit and credit cards). The rating system identifies the type of credit product "I" or "R" and beside it is a number between 1 and 9 that represents your payment habits: 

1 = Up to date and in good standing
2 = 30 – 59 days in arrears
3 = 60 – 89 days in arrears
4 = 90 – 119 days in arrears
5 = 120 – 150 days in arrears

7 = indicates that the individual is in credit counselling
8 = indicates that a vehicle has been repossessed
9 = Bad debt right off. 

If you fall into arrears on your credit 1-5 months and then pay your account up to date, your rating will be restored to a "1" rating. Example: If you had a credit card that was 3 months in arrears and was reporting to your credit as a R3 rating, if you paid it up to date, it would become a R1 rating. 

If you allow the debt to go 6 months in arrears and receive and "8" or "9" rating this will remain on your credit 6 years from the date the debt is settled or paid in full.

If you have a credit card that has been cancelled, this will also show even if you continue to make payments. 

For more information about building good credit and a strong financial profile please visit www.trueassess.com.