The Importance of Knowing your Credit Report
There is a lot of important information in your credit report. Your report contains details on every loan that you have taken out in the last six years. This report lists information such as how often you pay on time, how much you owe, your limit on each account, creditors who have accessed your report and much more. Credit reports are prepared by the major credit bureaus in Canada. The two major credit bureaus are Equifax and TransUnion.
The information in your credit report is used by lenders in order to determine your “risk.” This means that lenders check your report before they decide to give you a loan. A “bad” credit report could lead to you being offered a higher than normal interest rate or being denied by a lender.
Many people believe that the information in a credit report is secret and can only be accessed by credit bureaus and lenders. This is not true. Not only can you check your own credit report, but you should check your own credit report.
Why you Should Check your Credit Report
There are a number of reasons why it’s important to check your credit report. One reason is to check for errors. You might be surprised to find out that many credit reports contain errors. Some of these errors are data entry issues caused by someone inputting the information incorrectly. Other errors involve having incorrect information in your report (such as someone else’s data) as well as situations where loans have been paid off, but the report has not been updated to reflect this.
According to a 2005 survey by the Public Interest Advocacy Centre, of those who checked, 18% of people found errors in their credit report. As you can imagine, this can cause serious problems if you have incorrect information on your report when you try to get a loan.
Another reason why you should check your credit report is to understand the information that is in it. Many people are unaware as to how their actions are recorded by the credit bureaus. Looking at your credit report can help you realize what information is recorded. This can cause you to make changes in your financial life that could see you improve your credit report.
How to Check your Credit Report
There is a myth that checking your own credit report actually hurts you. This is not true. The myth comes from the fact that it can hurt your credit if lenders frequently do inquiries into your report. This is because it shows that you are attempting to get a lot of loans, which could mean that you are having trouble managing your finances.
However, checking your own report is not considered the same type of inquiry and, therefore, doing so does not hurt your credit report.
You can get a copy of your credit report for free from both Equifax and TransUnion. To do so, you will need to request your report. This can be done on online or by phone. Your report will be mailed to you.
You can get an instant electronic copy of your report from the credit bureaus, but they both charge a fee for this service. They also charge to provide you with your credit score, which is a three-digit number that is calculated using the information in your report.
How to Repair your Credit Report
If, after checking your credit report, you find that it is not as positive as you would like it to be, there are a few things you can do. First, if you find any errors, both credit bureaus have a process to follow in order to have them corrected. The instructions for doing so are usually included with your report.
You can improve your credit report by following good credit practices. Lenders like to see that you can handle debt responsibly. This means that you should ensure that you always make your payments on time, don’t miss any payments and don’t borrow more money than you can handle. When you regularly make payments on time, you build a credit history that will be noted on your credit report.
As a warning, don’t fall for organizations that say that they are able to go into your credit report and make instant changes to improve it. All that these companies can do is correct errors, which you can do on your own. The only way to genuinely improve your credit report is to build a good credit history over time.