Understand the secrets of your credit profile

Have you ever applied for a loan or credit card or financed the purchase of furniture or home appliances? In this case, you must have a credit report. Here’s what it is and what it contains exactly.

Two major credit agencies, Equifax and TransUnion, prepare a comprehensive leaflet about you. The latter can be consulted by the lenders you will deal with.

It is in a way your “ratio”, an indicator that will allow financial institutions and some organizations to assess the risks they represent.

It is on this basis that they will agree to give you a loan or a credit card, for example.

Credit scores and score

Each credit report consists of two parts:

Credit scores (R-1 through R-9, I-1 through I-9, or M-1 through M-9), which describe your payment habits and payment history. The letters correspond to different classes of financial products (R: revolving credit; I: installment credit; M: mortgage loan). The numbers at the same time represent a gradation from best to worst.

R-1, for example, means you pay your bills on time, and R-9 means you left without an address, your account has been canceled or you’re bankrupt.

“All ratings assigned to clients remain in their files for six years,” explains Pierre Fortin, licensed insolvency trustee and president of Jean Fortin et Associés.

The score is a score ranging from 300 (worst) to 900 (best) that reflects the overall quality of your credit profile as calculated by agencies that incorporate various factors. The higher the scale, the better the lenders will look at you, as this means the lower the risk of defaulting on debt.

Each time you apply for a loan (car, mortgage, etc.), card or line of credit, know that the lending institution will review your file.

Do you need to have a good track record?

“If your credit report is good, you have a better chance of getting a lower interest rate,” says Pierre Fortin.

but that is not all. He adds that landlords also consult credit files before signing a lease agreement with the tenant, and car or home insurance premiums can also vary depending on the quality of the insured’s file.

why ? Because the debtor is less likely to take care of his property – maintaining his property ceiling for example – and therefore more likely to make claims.

But you can’t search your credit report all you want! You will need to give your permission first. However, this will be required for any loan application, insurance quote, by the owner, etc.

So it’s a double-edged sword: if you say no, you may also be denied the good or service you want to get.

Tips

• You should check your file at least once a year and before applying for credit to ensure that it does not contain errors. It will also let you know if you are a victim of fraud if someone is trying to obtain or obtain credit on your behalf.
• We all have the right to check our credit report and there is no negative impact of doing so regularly. Furthermore, the two agencies have recently made information more accessible by allowing consumers to review their scores for free. To find out more: equifax.ca And the TransUnion
• If you need a helping hand to better understand your credit report, know that companies like Jan Fortin, advisors and trustees (JeanFortin.comIt can help you see things more clearly. You can also find a lot of information on the Canadian Financial Consumer Agency website (canada.ca/en/financial-consumer-agency).