Credit Report
A credit report is a detailed breakdown of an individual’s credit history prepared by a credit bureau. Your credit report is a review of your financial history and level of responsibility. Credit reports typically divide information into four sections.
The top of the report contains personal information about the consumer such as the individual’s current and previous addresses, telephone number, Social Security numbers and employment history.
The second section comprises a summary of all your debts such as student loans, mortgages and credit cards. It also includes a credit history summary such as the number and type of bank or credit card accounts that are past due or in good standing, and detailed account information related to high balances, credit limits and the date accounts were opened. They also list credit inquiries and details of accounts turned over to credit agencies such as information about liens and wage garnishments.
The third section includes public records such as bankruptcies, judgments and tax liens. The bottom of the report lists all of the entities that have recently asked to see the individual’s credit report.
Potential creditors and lenders use credit reports as part of their decision-making process to decide whether to extend you credit — and at what terms. Others, such as potential employers or landlords, may also access your credit reports to help them decide whether to offer you a job or a lease. Your credit reports may also be reviewed for insurance purposes or if you’re applying for services such as phone, utilities or a mobile phone contract.
There are two types of credit inquiries: “soft” and “hard.”
“Soft” inquiries may result from your checking your own credit reports, companies extending you pre-approved offers of credit or insurance, or your current lenders and creditors conducting periodic reviews of your accounts. Soft inquiries do not impact credit scores. Regularly checking your credit reports can help you monitor your credit accounts and enable you to recognize inaccurate or incomplete information, or suspicious activity that may signal potential identity theft. You could do a soft credit inquiry by “clicking here”.
“Hard” inquiries occur when companies or individuals, such as a credit card company or loan servicer, review your Equifax credit report because you have applied for a job, credit or service – for example, a new loan, an apartment or rental home, a credit card, utility service, or a mobile phone contract. Hard inquiries remain on your Equifax credit report for two years and may negatively impact credit scores, although the impact may lessen with time.
Federal law also entitles consumers to receive free credit reports if any company has taken adverse action against them. This includes denial of credit, insurance, or employment as well as reports from collection agencies or judgments; however, consumers must request the report within 60 days from the date the adverse action occurred.
A credit score is a 3-digit number that allows lenders to determine a potential borrower’s credit risk—the risk they run of not paying back their credit cards or loans. Your credit scores are an important aspect of your financial profile. They may be used to determine some of the most important financial factors in your life, such as whether or not you’ll be able to lease a vehicle, qualify for a mortgage or even land that cool new job.
The factors that affect an individual’s credit score are Payment History, Delinquencies, Balance-to-Limit Ratio, Recent Inquiries, Length/history of Accounts, Variety of Credit Accounts, Too many accounts, etc.
In Canada, credit scores range from 300 up to 900 points, which is the best score.