A Credit Score is used by a lender to evaluate the potential risk of offering a loan to a client. The score helps the lender identify who can qualify for a loan, at what interest rates they would qualify and with what credit limits.
A Credit Report is a historical record of an individual’s credit use. It outlines an individuals past borrowing and repayment history, which gives a potential creditor an insight into a client’s creditworthiness.
A credit report includes personal contact information, home address, employment history, and credit history for an individual. A credit history is compiled when an individual requests credit from a lending institution [i.e. credit card, department store, bank loan, car loan]. The lending institution then reports the client’s payment history to the credit bureau.
Credit reporting companies calculate your score based on when the credit was established, your payment history, how much debt you have outstanding and how frequently new credit his requested.
In general, the higher your score, the less likely you are to become delinquent in your payments down the road. This chart identifies an individual’s potential delinquency rate over the next 2-year period based on credit score.
It is very important to monitor your credit report regularly
Equifax and TransUnion are the main credit reporting companies in Canada.
Click on the links below to request your credit reports.