Credit Reports

It is very important to know your credit and what effects it has when it comes to mortgage financing. But What is a credit report?

A credit report is a history of how consistently you pay your financial obligations. A credit report is created when you first borrow money or apply for credit. On a regular basis, the 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 – 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.

Equifax Canada receives this information directly from the financial and retail institutions and retains it to help other lenders make decisions about granting you credit. Because your credit report contains all the information received from your lenders and provides a picture of your financial health, other lenders will request your report when they are determining whether or not to grant you a loan. Your credit report is a history that will help them determine what kind of lending risk you are – if you are likely to repay your obligation on time or not.

Below is a list of the major sections found in your credit report:

  1. Personal ID – Includes key identification information, such as your name, address, date of birth, and Social Insurance Number (SIN).
  2. Consumer Statement – Allows you, the consumer, to add a brief comment about any information in your report.
  3. Credit Info – Provides details of your credit accounts and transactions and shows if payments are being made on time.
  4. Banking Info – Includes information on your bank account and NSF check history.
  5. Public Record Info – Contains information about secured loans, bankruptcies, and/or judgments.
  6. Third-Party Collectors – Contains information about any involvement with a collection agency trying to collect on a debt.
  7. Inquiries – Includes all organizations or individuals that have requested a copy of your credit report in the past three years.

*Note: Mortgage information – Details about your existing mortgage(s) may appear in your credit report. Mortgage information is not used to calculate your credit score since it is not reported by all lenders.

How is information in my credit report used? Credit information is gathered by credit reporting agencies, sometimes called credit bureaus. 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. Credit grantors 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 as complete as possible. Other sources of the information contained in your credit report can include public records from courthouses across the country and collection agencies.

Who can access my credit report? Federal and provincial laws are very specific regarding who can review your credit report and for what purpose. 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.

When you apply for a loan or credit card, you are usually asked to complete and sign an application form. An application 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. In addition to your name, an application often asks for your date of birth, your current address, and a previous address if you’ve recently moved – information that helps to locate your credit report at a credit reporting agency. Each time a member of the credit reporting agency requests your report, the request is noted on your report as an inquiry and kept for 3 years. You can therefore see a record of who has requested your credit report and when.

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.