A credit report is a detailed up-to-date report of your credit history. It shows banks/lenders the level of risk if they lend you money. It is also an indicator of how consistently you pay off your bills and debts. Your credit score is one of the factors lenders consider when qualifying you for a mortgage. A good credit score, for example, can help improve your chances of being approved.
To find out your credit score, contact Canada’s two credit-reporting agencies: Equifax Canada andTransUnion Canada. These agencies can provide you with an online copy of your credit score as well as a credit report – a detailed summary of your credit history, employment history and personal financial information.
If you find any errors in your report, notify the credit-reporting agency and the organization responsible for the inaccuracy immediately.
Improving Your Credit Score
- If your credit score is not as high as you think it should be, make sure that the information in your credit report is correct. If it is correct, read your report carefully to find out which factors are most likely having a negative influence on your score, and then work to improve them.Here are some tips, from the Financial Consumer Agency of Canada (FCAC), on how to improve your credit score:
- Always pay your bills on time. Although the payment of your utility bills, such as phone, cable and electricity, is not recorded in your credit report, some cell phone companies may report late payments to the credit-reporting agencies, which could affect your score.
- Try to pay your bills in full by the due date. If you aren’t able to do this, pay at least the required minimum amount shown on your monthly credit card statement.
- Try to pay your debts as quickly as possible.
- Don’t go over the credit limit on your credit card. Try to keep your balance well below the limit. The higher your balance, the more impact it has on your credit score.
- Reduce the number of credit applications you make. If too many potential lenders ask about your credit in a short period of time, this may have a negative effect on your score. However, your score does not change when you ask for information about your own credit report.
- Make sure you have a credit history. You may have a low score because you do not have a record of owing money and paying it back. You can build a credit history by using a credit card.
- Once your credit score has improved, work with a mortgage professional to obtain a mortgage that meets your individual needs.