Your credit rating is a measure of your credit-worthiness or in other
words, your record of borrowing and repayment. Without a credit
rating, few institutions will lend you money.
Governed by provincial laws, the credit bureau - the clearing-house of
information on consumers' use of credit - provides a credit history,
which is a list of facts about how you handle debt. This information
is gathered from financial institutions, retailers and other lenders.
Most of your credit information remains on your file for seven years.
In addition to negative information, positive information is also
reported on your file.
Here is how to build a good credit rating:
Pay your bills promptly, especially credit cards.
Borrow only what you need and what you can afford.
Try to pay off loans on time and as quickly as possible.
Not only does it help your credit rating, you also save valuable interest costs.
Checking Your Credit Rating
As a consumer, it's
your right to know your credit rating. Credit can be denied based on
inaccurate or insufficient information. You may want to check your
file if you aren't sure of your credit rating, if you are refused
credit or if you plan to apply for a large amount of credit such as a
mortgage. You can get a copy of your credit report through one of the
many credit bureaus across Canada for free or for a nominal charge.
Here are some guidelines:
Contact your local credit bureau, which you can find in the yellow pages.
Call to find out how you can review your file. You'll be asked to provide
identification to ensure the confidentiality of your file. A
written report may take two to three weeks.
If you notice any errors and can offer written proof, your file will be changed
immediately. If you can't supply written proof, give the facts to the
credit bureau, which will then investigate. If your facts are confirmed,
your file will be updated.
If you see an error but proof cannot be found, what happens next depends
on where you live. Each province has its own legislation relating to credit
bureaus. The information you are challenging may be taken off your
file or a note may be added, saying the information is "in dispute".
If an error has been corrected, the credit bureau must notify members who
have inquired about you during previous months (as required by provincial law).
Dealing with a Credit Crisis?
Chances are you have a credit problem if you:
Can't make your minimum monthly payments on your credit cards,
Take cash advances for living expenses,
Aren't sure how much you owe and
Never seem to be out of debt.
Here are some tips to help you recover:
Put away all of your credit cards.
If you have several
debts, consider consolidating them into one consumer loan. You'll
save on the interest rate alone, especially if your debt is from
If slow payments are affecting your credit rating, consider contacting your
creditors to see if you can make alternative arrangements. Be
honest with your creditors. Let them know you're in difficulty and
work with them to find the best way to meet your financial
Try and figure out how you got into debt and stick to a plan
to prevent it from happening again.
Re-evaluate your spending habits and lifestyle.
Seek the advice of a credit counselor if you can't sort things
out yourself. There are several not-for-profit credit counseling agencies
across Canada . An experienced counselor will sit down with you to look
at your situation, discuss your options and help you develop a course of action.
When you begin to recover financially, consider keeping only one credit
card. It will be easier to track your spending and you won't have the
collective credit limit to tempt you.