Credit report and credit score

Your credit history summarizes most of the types of credit you use, including credit cards, loans and financing plans. It also shows whether you have made your payments on time.

Your credit history is based on information sent to the two credit-reporting agencies in Canada, Equifax and TransUnion from businesses that have given you credit. When you want to borrow money, the lender will usually check your credit history with these agencies, also known as credit bureaus.

You build a good credit history by consistently making payments on your credit cards and other loans on time. If you have no credit history, or a bad credit history, you will have more difficulty borrowing money, especially large amounts such as a mortgage.

The credit reporting agencies provide information about your credit history in two ways: as a credit report and a credit score.

Credit report

Your credit report includes personal information such as your current and previous addresses and employers. Financial information in the report can include information on:

  • your bank accounts, including any “bad” cheques or non-sufficient funds (NSF) payments
  • credit you already have, such as credit cards, lines of credit and loans
  • a bankruptcy or a court decision against you that relates to credit
  • debts that you did not pay, which were referred to collection
  • a list of all people and companies who have made inquiries about your credit, including lenders, yourself and other authorized organizations (for example, a landlord or employer if you have given your consent).

Credit score

Your credit score indicates the risk you represent to lenders compared to other consumers. The higher your score, the lower the risk. The credit reporting agencies Equifax and TransUnion use a scale from 300 to 900.

However, each lender may have its own way of determining your credit score. Each lender can set its own minimum score for lending money to you. Lenders can also use your credit score to set the interest rate that you will pay to borrow money.

Factors that can affect your credit score include:

  • how long you have had credit
  • your history of making payments (Do you carry a balance on your credit cards? Have you missed payments?)
  • your outstanding debts (Are you close to your credit limit?)
  • the number of recent inquiries about your credit history (Are you trying to get more credit?)
  • the types of credit you are using
  • any record of bankruptcy or your debts being sent to a collection agency.

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