Many people don’t realize how important it is to maintain a good credit rating. Nor do they understand what is involved in achieving this.

The first step is to review your own individual credit report, which is a detailed history of how consistently you meet your financial obligations. 

In Canada there are two major credit bureaus – Equifax and Trans Union.  Each of these companies can provide you with a copy of your individual credit report, for a nominal fee.  It is more useful to order a credit report with your credit score (beacon score). 

Once you have a copy of your credit report you should check for the following: 

• wrong mailing addresses, 
• incorrect social insurance number, 
• signs of identity theft, 
• errors in your credit accounts, 
• late payments, 
• unauthorized hard enquiries. 

Hard inquiries, done when you apply for new credit, can affect  your credit score while soft inquiries by your existing creditors when requesting an update of your information do not affect your score. 

What is a Beacon Score? 

Your credit score – or beacon score – translates information from your credit report and other sources into a number between 300 and 900, representing a prediction of your overall credit-worthiness.  The higher your score the more likely you are to be approved for a mortgage and receive favourable rates. 

How long do items appear on my credit report? 

Inquiries remain on your report for three years after the date of inquiry. Your credit information remains for six years from the activity date. 

Consumer proposals will remain on your report for three years while the first bankruptcy reports stay for seven years. Should you be unfortunate enough to declare bankruptcy twice or more, the second and subsequent times will remain on your report for 14 years each. 

You can see how credit abuse can impede your ability to obtain credit in the future. 

What about credit repair? 
 

• Never pay for credit repair services. Only responsible credit practices over time can improve a poor credit history. 
• Pay your debts on time – always meet due dates.  Ensure timely payments with pre-authorized withdrawals 
• Don’t max out your credit cards – use only up to 50% of a card’s credit limit. 
• Borrow only the amount you can afford to repay. 
• Re-establish credit as soon as possible after being discharged from bankruptcy, through responsible use of a credit card or line of credit.