YOUR CREDIT HISTORY

When you apply for credit, the lender reviews a copy of your financial history. This report, obtained from the local credit bureau, tells the lender how you’ve managed the debt you already have. Your history largely determines whether or not you get that new loan or credit card.

You credit-worthiness is measured on a nine point scale by those you already owe money to or have owed in the preceding six years. Requests for credit are shown: too many applications and you begin to look like a “credit seeker”, suggesting there’s an underlying problem. It also records judgments, collections and bankruptcies. And some things like student loans, certain utility bills and unpaid taxes, don’t show up at all. The credit bureau is a co-operative with members exchanging information. Government agencies like Canada Customs and Revenue don’t share, and therefore aren’t part of the system.

An explanation of the ratings:
“0”: Too new to rate.
“1”: Pays within 30 days, payments up to date.
“2”: Pays in 30 to 60 days, not more than one payment behind.
“3”: Pays in 60 to 90 days, or 2 payments behind.
“4”: Pays in 90 to 120 days or 3 or more payments behind.
“5”: At least 120 days overdue, but not in collection.
*There is no “6”designation
“7”: Making regular payments under consolidation or credit counselling program.
“8”: Repossession.
“9”: Account in collection, a bad debt.

To review your credit history, contact your local credit bureau. You get an explanation with your free copy and can correct any errors or misinformation.


See Also: Credit Report Repair | What is a Credit Score? | How can I improve my credit score?

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