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.
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 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: