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Your credit history is a storybook.  It tells the story of your financial life and is updated quite often.  Page one is made up of your current report that is divided into personal information.  There is a variety of characters that refer to your credit report throughout the storybook.  For example, potential creditors or lenders use your credit report in their decision-making process to give you credit and at what terms.  Potential employers and landlords may access your credit report to help them decide whether to offer you a job or a rental lease.  Service companies such as phone, utilities, or mobile phone contracts, may review your credit report for insurance purposes.  Your behaviour towards the terms of the credit card or other monies borrowed is monitored constantly like a report card.  The Letters page show a score.  There's a recommendation page that suggests you check your credit report every so often to make sure there aren't errors and to prevent the possibility of fraud.  There are other pages in between the story consider, but I'll leave you in suspense to see how it all ends.  Lets turn the page and get started!

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Video #1: What Information is in a Credit Report? (Equifax Canada)

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Video #1: What Information is in a Credit Report? (Equifax Canada)

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This video is the start-up to help you get into the wise habit of checking your credit report annually.  A credit report is a summary of your personal information and your financial history such as credit cards in your name, various loans, and unpaid debts.  Banks, lenders and other companies access your report to help determine your ability to pay when applying for a loan or credit card.  A credit report also assists with deciding what interest rate to give based on the risk perceived.  Creditors and lenders you have accounts with report to the three nationwide consumer credit reporting agencies who collect and maintain a history of your credit activity.

I discovered that you can get a free copy of your credit report, once a year, from each of the nationwide consumer credit reporting agencies. Go to www.annualcreditreport.com which provides a summary but no credit score is given. Other websites didn't offer this information. Furthermore, Equifax sponsored this video, which is one of the nationwide reporting agencies. In my research, I also discovered that TransUnion and Experian are the other two agencies in Canada.

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Website #1: What is a Credit Score & How is a Credit Score Calculated in Canada?

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Website #1: What is a Credit Score & How is a Credit Score Calculated in Canada?

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A number is your credit score based on exact information from your credit report.  This score is used by lenders to forecast the probability that you will pay back the debt in the future.  The credit score changes often because it depends on how the lender understands and uses your credit score.

Credit scores in Canada range from a low 300 to a high of 900 (depends on which company calculates the score).  If your score is 750, then "750 people out of 900 people are likely to repay their debt."  Based on the scale below, 750 is a good score.

The number represents the odds that a lender will get back the money that was lent out to someone therefore, the higher the number, the better the odds!

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At some point, you'll buy your last car and refinance your last mortgage. Surely then you can stop worrying about your credit scores.

Well, not really, although there are situations when credit scores shouldn't be anyone's main concern.

Let's start with some reasons why credit scores still matter, even when you don't plan to borrow money.

LENDERS AREN'T THE ONLY ONES CHECKING YOUR CREDIT

Most insurers use credit-based insurance scores, which use information from credit reports to help set premiums for auto, homeowners and renters policies. A drop from excellent to poor credit can more than triple homeowners' premiums in some states. Credit can have a bigger impact on auto insurance premiums than any other factor, including someone's driving record, according to an investigation by Consumer Reports.

That's not all. Cellphone companies often reserve their best deals for those with the best credit. Many employers check credit reports, which could be an issue should you want to work or return to work in retirement. Utilities and landlords also typically check credit scores, which might become an issue if you move. Senior housing, assisted living and continuing care retirement communities also may use credit histories or scores to evaluate applicants.

YOUR BORROWING DAYS MAY NOT BE OVER

Life happens. You may need to borrow money to pay medical bills, replace a car, help a family member, make home repairs or remodel your home to allow you to age in place. If you have to move, you may need a new mortgage. If money gets tight, you may want to access some your home equity with a reverse mortgage.

Reverse mortgages allow homeowners age 62 and older to tap their home equity without having to repay the loan until they sell, move out or die. Reverse mortgage lenders typically don't have minimum credit score requirements, but a credit check is part of the financial assessment needed to get the loan.

KEEPING GOOD SCORES ISN'T THAT HARD

A single credit card is enough to maintain good credit scores. Any card will do, as long as it reports to all three credit bureaus (most do). The card should be used lightly but regularly and balances paid in full, since there's no credit score advantage to carrying debt.

WHEN CREDIT SCORES SHOULDN'T BE YOUR TOP PRIORITY

A lifetime habit of responsible bill payment can be hard to break. But financial well-being sometimes requires putting concerns about credit on the back burner, especially as you get older. Some examples:

YOU'RE STRUGGLING TO PAY YOUR BILLS:

It makes little sense to keep sending money to credit card companies and most other lenders if you're having trouble paying for necessities: shelter, food, utilities, medications. You also need help if you're being sued over debt or hounded by collectors. Consider talking to a credit counselor affiliated with the National Foundation for Credit Counseling and to an experienced bankruptcy attorney about your options.

YOU NEED TO FILE BANKRUPTCY:

If bankruptcy is the best option, you have plenty of company. The rate of Americans over 65 filing for bankruptcy has tripled since 1991, according to the Consumer Bankruptcy Project. But bankruptcy is not the credit score killer it's often reputed to be. Credit scores typically plunge in the months before a bankruptcy filing, but then start to rise soon after. With responsible credit use, it's possible to get back to near-prime credit scores within a few years after bankruptcy.

YOU'RE TRYING TO ESCAPE AN ONEROUS TIMESHARE:

There is often no easy way out of a timeshare, a kind of vacation ownership that requires paying annual fees and other costs. Sometimes owners can give the timeshare back to the resort developer, or sell or give it away. Other times, the only way to get rid of it is to stop paying and experience the consequences, which can include foreclosure and credit score damage.

It's impossible to predict the potential costs of lower credit scores, but older people with less reason to borrow may well decide the hit to their scores - which can linger for up to seven years for most negative marks, and up to 10 years for bankruptcy - is better than continuing to struggle for the rest of their lives.

_______

This column was provided to The Associated Press by the personal finance website NerdWallet . Liz Weston is a columnist at NerdWallet, a certified financial planner and author of "Your Credit Score." Email: [email protected] . Twitter: @lizweston.

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At What Age Can You Ignore Your Credit Score?

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At some point, you'll buy your last car and refinance your last mortgage. Surely then you can stop worrying about your credit scores. Well, not really, although there are situations when credit scores shouldn't be anyone's main concern. Let's start with some reasons why credit scores still matter, even when you don't plan to borrow money.

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Video #2: How to Level Up Your Credit Score in 3 Months

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Video #2: How to Level Up Your Credit Score in 3 Months

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If your credit score is in a range of very poor to fair (300-720), then this video suggests 5 hassle-free steps that can raise your credit score in a few short months.
Step 1 requires that you must figure out where your "creditworthiness" (or your reliability to repay the monies borrowed) stands.  This is done with getting a credit score and report.  Step 2 involves prioritizing paying off all outstanding bills and debts.  Step 3 using credit cards as much as possible in daily purchases and expenses.  Step 4 suggests setting up AutoPay for your credit card account to make sure the full balance is withdrawn from your chequing account when the bill is due.  Credit card and chequing account should be from the same financial institution.  Step 5 involves contacting your credit card issuer to ask for an increase in your credit limit.  By doing this, you'll be monitoring your spending which will result in a decrease of your credit usage rate.  Maintaining your credit usage rate under 35% will improve your credit score!

This video is unique because it was presented by a young person and the strategies were straightforward. It was difficult to find other videos relating to this topic because there were American versions with minor differences in credit reporting. I learned that when we pay with cash or a debit card, these methods of payment don't increase your credit score. I've also concluded that the due date is the best date to pay any outstanding bills and in the full amount.

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How to Level Up Your Credit Score in 3 Months

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Video #3: What to Do if You've Been Denied Credit 

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Video #3: What to Do if You've Been Denied Credit 

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You've been denied credit. Whats the next step?  The first step is to tell yourself that lenders use information in your credit report for their decision-making.  Late or missed payments, overuse of available credit, going over your credit limit regularly, or not having enough credit history to make good assessment, are reasons why the lender may have denied credit.  But you have rights as a consumer when applying for credit.  A lender is supposed to explain the reason for the denial by sending you an adverse action letter.  It's up to you to review it and note questions to ask when you contact the lender.  The next step would be to obtain a copy of your credit report and examine it to see if you need to change your habits for the future.

This video was chosen because it focuses mostly on you, as a borrower. What I liked about is that it helps us realize that our credit report is like a report card of our financial life and by understanding how to read it can help you take control of your finances. It's up to us to be responsible to check that the information in the report is correct.

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There are 5 factors used in calculating and determining your credit score.  Factors are based on what you do or don't do with the credit you already have.
1) Payment History (35%) - Reflects all payments made to credit cards, line of credit, car-personal-student loans, cell phone, and other regular debts.
2) How Much is Owed (30%) - Current payments determine if you can handle any more payments for any extra money that you borrow.
3) Length of Credit History (15%) - Reflects how long it's been since you first obtained credit, how long each item on your credit report has been reporting and current use of credit.
4) New Credit Applications (10%) - Applying for additional credit can "hurt" your score; more credit means harder to keep up with payments!
5) Types of Credit Used (10%) - Reflects how you handle different kinds of credit overall.

I chose this website because I liked how they explained what a credit score is, how they calculate it and what the 5 key factors are determining your credit score. I thought full amounts were included in the calculation but I discovered that It's only a percentage with criteria. In trying to find a detailed website that goes deep in explaining the credit score, this one was the best. I liked his motto, "I work for you and not for the banks!" I was impressed because he's Canadian and worked at RBC and at a Chicago bank. Other websites didn't provide an invitation but, this author does work for you when he invites you to try the credit score estimator link to get a rough idea of what your score might be.

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Video #4: Know Your Rights: Credit Reporting

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Video #4: Know Your Rights: Credit Reporting

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As mentioned in previous videos, the rule is to check your credit report annually.  By contacting Equifax Canada or TransUnion Canada, (customer reporting agencies), you can obtain a free copy of your report.  The Customer Reporting Act works in your favour with rights.  It governs that "these agencies collect, maintain and report your credit, and personal information in a responsible way."  You have a right to know what's been reported about you and who has received that information.  Also, you have a right to correct any mistakes or inaccurate information in your report.  Furthermore, you have a right to contact the Customer Reporting Agency to correct an error and steps will be given to you.

One piece of information that I didn't see on other websites is the possibility that if something doesn't look right in your credit report, it could be a red flag that an identity thief could be using your personal information. Also, by not checking the accuracy of your report, you could be charged higher interest rates! It's so important to protect yourself by knowing your rights.

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Know Your Rights: Credit Reporting | Connaissez vos droits : Évaluation du crédit

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Website #2: Other "Derogatory" factors which negatively affect your credit rating 

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Website #2: Other "Derogatory" factors which negatively affect your credit rating 

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Your credit rating can lose points because of major bureau reporting errors which cost you financially and credit bureaus don't inform you about them.  Credit bureaus accept whatever information is sent to them without investigating the accuracy of the information (electronic reports).
1) Errors - a) Delinquent accounts reported on your file that DON'T belong to you.
b) Late payments that WEREN'T late.
c) Wrong mailings address.
d) Incorrect Social Insurance Number.
You're responsible to contact the bureau to fix any of these errors (do your annual check up of credit report!).
2) Moving Time at Address - The more you move, points lost; the longer you remain at one address, points gained.
3) Jobs/Employers - The more you change jobs, points lost; the longer you hold the job, points gained.
4) Mortgage or No Housing Information - Mortgages and renters, points gained; unknown information about your home, points lost; mortgage paid off, zero points!
5) Having High Revolving Credit Balances - High balances rotating between different credit accounts is a warning sign of possible financial trouble and credit risk.
6) No Debt - No debt, zero points! No credit history (risk), points lost.

I learned a lesson from this article. Sometimes you can't trust agencies but you can trust yourself by staying in touch with your report each year. I was shocked at the hidden factors that don't properly reflect your credit rating and that the bureaus don't even notify you. Information on your report has to be as accurate as possible because even a minimal loss of points effects your credit rating.

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Credit Rating 101 - Debt Canada: Your Canadian Credit Education Centre

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We have collected information from both of the consumer reporting agencies (credit bureaus), as well as our own research to try to provide a full picture on credit files and credit scores, including those little known "insider" secrets.

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Website #3: What to look for on your credit report

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Website #3: What to look for on your credit report

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Lenders use codes to send information to the credit bureaus about how and when you make payments.

These codes have two parts:
1) A letter shows the type of credit you're using.
2) A number shows when you make payments.

You may see different codes on your credit report depending on how you make your payments for each account.

Table 1: What letters mean in a rating on a credit report
Letter (Bolded), Meaning (italicized), : Example (after colon)

I) Installment credit
You borrow money for a specific period of time. You make regular payments in fixed amounts until you pay off the loan. : Car loan
O) Open status credit
You may borrow money when you need to, up to a certain limit. : Mobile phone account
R) Revolving or recurring credit
You may borrow money up to your credit limit on an ongoing basis. You make regular payments in varying amounts depending on the balance of your account. : Credit card
M) Mortgage loan
Mortgage information may be included on your credit report. : Mortgage

Table 2: What numbers mean in a rating on a credit report
Number (bolded) - Meaning

0) a) Too new to rate
b) Approved, but not yet used
1) a) Paid within 30 days of billing
b) Pays as agreed
2) Late payment: 31 to 59 days late
3) Late payment: 60 to 89 days late
4) Late payment: 90 to 119 days late
5) Late payment: more than 120 days late, but not yet rated “9”
6) This code isn’t used
7) a) Making regular payments using one of the following debt management options:
i) a consolidation order
ii) orderly payment of debts
iii) consumer proposal
iv) debt management program with a credit counselling agency
8) Repossession
9) a) Written off as a “bad debt”
b) Sent to collection agency
c) Bankruptcy

For example:
1) If you have a credit card account that you paid on time, it’ll be reported as “R1”.
2) If you have a line of credit, and you missed a payment by 45 days, it’ll be reported as “O2”.
3) If you have credit card debt and you’re being contacted by a collection agency for payment, it’ll be reported as “R9”

The best rating is 1. Any number higher than 1 will likely hurt your credit score.

*This is a replica of the website below to show what the score means on a credit report*.

This is a reference tool to show you what to look for on your credit report, what the letters mean on on a credit report, and what the numbers mean on the report.  This can be compared to an Equifax report.  I chose this website because its from the Government of Canada and the information is accurate.

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Financial information on your credit report

Your credit report may contain the following financial information:

non-sufficient funds payments, or bad cheques

chequing and savings accounts closed "for cause" due to money owing or fraud committed

credit you use, including credit cards, retail or store cards, lines of credit and loans

bankruptcy or a court decision against you that relates to credit

debts sent to collection agencies

inquiries from lenders and others who have requested your credit report in the past three years

registered items, such as a lien on a car that allows the lender to seize it if you don't make payments

remarks, including consumer statements, fraud alerts and identity verification alerts

Your credit report contains factual information about your credit cards and loans, such as:

when you opened your account

how much you owe

if you made your payments on time

if you missed payments

if your debt has been transferred to a collection agency

if you went over your credit limit

personal information that's available in public records, such as a bankruptcy

What to look for on your credit report

Lenders use codes to send information to the credit bureaus about how and when you make payments.

These codes have two parts:

a letter shows the type of credit you're using

a number shows when you make payments

You may see different codes on your credit report depending on how you make your payments for each account.

For example:

If you have a credit card account that you paid on time, it'll be reported as "R1"

If you have a line of credit, and you missed a payment by 45 days, it'll be reported as "O2"

If you have credit card debt and you're being contacted by a collection agency for payment, it'll be reported as "R9"

The best rating is 1. Any number higher than 1 will likely hurt your credit score.

Sample credit reports

To better understand how to read your credit report, find a sample credit from:

Note: These examples are for illustration purposes only. They may not include all information typically provided in a credit report. The presentation has been modified for online display.

Related links

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personal finance; credit; consumer protection; loans; borrowers

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Your credit report may contain the following financial information: non-sufficient funds payments, or bad cheques chequing and savings accounts closed "for cause" due to money owing or fraud committed credit you use, including credit cards, retail or store cards, lines of credit and loans bankruptcy or a court decision against

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Website #4: How Long Does Information Stay on My Equifax Credit Report?

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Website #4: How Long Does Information Stay on My Equifax Credit Report?

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The type of information and whether it's "negative or positive" determines how long information stays on your Equifax credit report.

Negative information consists of late or missed payments, collection agency accounts, a bankruptcy, judgments, secured loans and banking items (NSF cheque), stay on your report for 6 years.

Positive information consists of active accounts paid as agreed and closed accounts paid as agreed.  Active accounts remain on your Equifax credit report providing the account is open and the lender is reporting it.  If the lender reports than the last status of the account is paid as agreed, then the accounts stays on your report for up to 10 years from the date reporting by the lender as closed to Equifax.

Hard inquiries is a copy of Equifax credit report that is requested by a potential lender, creditor or service provider.  It is the response to a credit request or for certain services and inquiries stay on the Equifax report for 3 years.

I chose this website because I wanted to report on one of the credit reporting agencies in Canada. Equifax, TransUnion, and Experian websites mainly cover enrollment options online. But I was curious to know what happens to the information that's reported by one of the agencies and I found this article. What stood out to me was that in Canada, you should keep your financial records for at least 7 years before you shred them and Equifax keeps most information for 6 years. I know now that it's very important to pay my bills on time and make sure that my credit report is as accurate as possible on a yearly basis. I feel having done this assignment has prepared me very well with respect to my financial information in the future.

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Image #1: Mom's Equifax Report April 2019

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Image #1: Mom's Equifax Report April 2019

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This is an actual copy of an Equifax report for my mom which was completed by a property management company in April 2019.  Her personal information has been removed for privacy purposes.  This image can be cross-referenced with the Government of Canada rating information.  For example, my mom has an R1 rating with Capital One HBC and TD Credit Cards and this means that her revolving or recurring credit rating is good because she pays as agreed. Her rating for Rogers Communication is O1 or an Open Status Credit which is also good because she pays as agreed.

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This image is a list of countries by credit rating, showing long term foreign currency credit rating for bonds as reported by standard in poor's (August 2014).  Canada and Australia have a triple A credit rating (AAA); United States and France have a double a rating (AA); Central America has a triple b rating (BBB); and Ukraine has a triple c rating (CCC). Its interesting to note that many countries in Africa do not have a credit rating. At this time, the world is facing a health crisis and I am sure that these credit rating will change.

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1) What did you learn about your topic that surprised you the most?
I was surprised to learn that in order to borrow money, you have to build your credit history from scratch because your credit rating is your financial reputation.  Beware of people who could commit identity theft but the best way to maintain an accurate credit rating is to assess your credit report each year and follow up on any errors or suspicions.  I was surprised to find that the world has a credit rating and that Canada is one of the top countries with the top rating.

2) Provide a real-life example of how this topic is relevant or interesting for you.
I hope to lease a truck this summer.  This means that I don't have enough income to get a lease so it will have to go in my mom's name.  The dealership will take into account her credit rating and her ability to pay the lease that will be created.  She will also have to be approved for financing so most likely another Equifax report will be done.

3) If you could pass on your knowledge to a family member or a friend, what do you think is the most important thing to pass on?
When it comes to finances, you must take your credit rating along with you in your journey of financial transactions such as buying/renting a home, leasing a vehicle, getting a line of credit, or starting a business.  To stay out of debt is a must. Pay all your bills on time and in full or else the penalties will affect your credit rating. Don't overspend because that's the easiest habit. Once a year, do yourself a favour and check your credit report which in the end is a reflection of your financial journey.

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At some point, you'll buy your last car and refinance your last mortgage. Surely then you can stop worrying about your credit scores.

Well, not really, although there are situations when credit scores shouldn't be anyone's main concern.

Let's start with some reasons why credit scores still matter, even when you don't plan to borrow money.

LENDERS AREN'T THE ONLY ONES CHECKING YOUR CREDIT

Most insurers use credit-based insurance scores, which use information from credit reports to help set premiums for auto, homeowners and renters policies. A drop from excellent to poor credit can more than triple homeowners' premiums in some states. Credit can have a bigger impact on auto insurance premiums than any other factor, including someone's driving record, according to an investigation by Consumer Reports.

That's not all. Cellphone companies often reserve their best deals for those with the best credit. Many employers check credit reports, which could be an issue should you want to work or return to work in retirement. Utilities and landlords also typically check credit scores, which might become an issue if you move. Senior housing, assisted living and continuing care retirement communities also may use credit histories or scores to evaluate applicants.

YOUR BORROWING DAYS MAY NOT BE OVER

Life happens. You may need to borrow money to pay medical bills, replace a car, help a family member, make home repairs or remodel your home to allow you to age in place. If you have to move, you may need a new mortgage. If money gets tight, you may want to access some your home equity with a reverse mortgage.

Reverse mortgages allow homeowners age 62 and older to tap their home equity without having to repay the loan until they sell, move out or die. Reverse mortgage lenders typically don't have minimum credit score requirements, but a credit check is part of the financial assessment needed to get the loan.

KEEPING GOOD SCORES ISN'T THAT HARD

A single credit card is enough to maintain good credit scores. Any card will do, as long as it reports to all three credit bureaus (most do). The card should be used lightly but regularly and balances paid in full, since there's no credit score advantage to carrying debt.

WHEN CREDIT SCORES SHOULDN'T BE YOUR TOP PRIORITY

A lifetime habit of responsible bill payment can be hard to break. But financial well-being sometimes requires putting concerns about credit on the back burner, especially as you get older. Some examples:

YOU'RE STRUGGLING TO PAY YOUR BILLS:

It makes little sense to keep sending money to credit card companies and most other lenders if you're having trouble paying for necessities: shelter, food, utilities, medications. You also need help if you're being sued over debt or hounded by collectors. Consider talking to a credit counselor affiliated with the National Foundation for Credit Counseling and to an experienced bankruptcy attorney about your options.

YOU NEED TO FILE BANKRUPTCY:

If bankruptcy is the best option, you have plenty of company. The rate of Americans over 65 filing for bankruptcy has tripled since 1991, according to the Consumer Bankruptcy Project. But bankruptcy is not the credit score killer it's often reputed to be. Credit scores typically plunge in the months before a bankruptcy filing, but then start to rise soon after. With responsible credit use, it's possible to get back to near-prime credit scores within a few years after bankruptcy.

YOU'RE TRYING TO ESCAPE AN ONEROUS TIMESHARE:

There is often no easy way out of a timeshare, a kind of vacation ownership that requires paying annual fees and other costs. Sometimes owners can give the timeshare back to the resort developer, or sell or give it away. Other times, the only way to get rid of it is to stop paying and experience the consequences, which can include foreclosure and credit score damage.

It's impossible to predict the potential costs of lower credit scores, but older people with less reason to borrow may well decide the hit to their scores - which can linger for up to seven years for most negative marks, and up to 10 years for bankruptcy - is better than continuing to struggle for the rest of their lives.

_______

This column was provided to The Associated Press by the personal finance website NerdWallet . Liz Weston is a columnist at NerdWallet, a certified financial planner and author of "Your Credit Score." Email: [email protected] . Twitter: @lizweston.

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At What Age Can You Ignore Your Credit Score?

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At some point, you'll buy your last car and refinance your last mortgage. Surely then you can stop worrying about your credit scores. Well, not really, although there are situations when credit scores shouldn't be anyone's main concern. Let's start with some reasons why credit scores still matter, even when you don't plan to borrow money.