What You Need to Know About Credit

Canada Motor Car, Used Car Dealership, Ontario

Banks, credit card companies, retail stores who offer credit, car leases, car loans, student loans- they all report to the credit bureau. If you have ever had any dealings with any of the aforementioned institutions, then you can be sure that you have a credit report.

A credit report is your financial report card. It is reported to monthly by all of the institutions from which you have borrowed money or have credit with. This is their way of protecting themselves, of not only keeping track of your payment history with them but with other companies as well. This can work in your favor because as your credit matures, more and more companies will be willing to lend you money, to trust you based solely on your payment history. However, if by chance you happened to miss a few payments, defaulted on a student loan, or filed for bankruptcy, then the opposite is in store for you. Higher interest rates, limited amounts financed and other restrictions may be placed on your loan depending on the severity of your bad credit.

Check your credit report at least once a year. You may think your credit history is perfect because you have never been late or missed any of your loan payments. What you may not know is that your credit card company may have mistakenly reported that you were late paying last month’s bill. This happens quite frequently and it is important to catch these mistakes before it’s too late.

It is not unusual for your credit report to be used as a determining factor in your insurance quote. Potential employers have also started taking a closer look at your credit bureau. Today, you credit history is used as a measuring tool more than simply applying for a loan. Landlords are also interested in seeing a prospective tenant's credit history to judge whether you are reliable and will pay the rent.

Your credit report contains information about your past and present personal and financial situation. Credit cards that had never been formally cancelled will appear on your credit history as an open line of credit. This is not a bad thing, as long as the balance is at zero, because having a card open for a few years is great for your credit. Credit-related court judgments against you in a lawsuit such as bankruptcy, will be recorded in your credit report and follow you on your credit history for many years to come. If you have any unpaid debts they will appear in your credit report. If you are applying for a loan, these debts will be entered into the credit formula as debt and affect your credit rating. A bad credit rating may prevent you from getting the best offer in terms of rate and amount.

There are two major credit companies operating in canada, Equifax and TransUnion. When you check your credit, make sure you look at both as they do not communicate with each other and they could be totally off from the truth. If you find errors, you can write to the agencies explaining the error, and they have 30 days to correct it. You will want to check your report again after you have sent the corrections to be sure the changes were made.

Your credit is your responsibility. It is you who must ensure that your credit report is displaying your correct credit history. Please feel free to contact our credit specialists at www.canadamotorcar.ca if you have any further questions.