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Your credit report is a summary of your credit history. Your credit score is a number calculated using a formula based on information on your credit report. Lenders don't actually share the exact formula that they use to calculate credit scores. There are several factors that we know influence credit score: length of credit, existing credit, missed payments, if you are close to or above your credit limit, debts, if your debts have been sent to a collection agency, and insolvency or bankruptcy. Credit bureaus have to follow rules as to who is allowed to view your credit report and how it can be used. Included in your credit report are your personal information, financial information, and other accounts (such as mobile phone/internet provider, and mortgage information).

This website is included as it provides an introduction to credit reports and credit scores. It also includes a more detailed list of factors that influence your credit score compared to other websites. I found it interesting to learn that lenders do not share the exact formula used to calculate credit scores, and so it would be impossible to know what exactly is included in the analysis of your credit rating.

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Your credit report

Your credit report is a summary of your credit history.

Your credit report is created when you borrow money or apply for credit for the first time. Lenders send information about your accounts to the credit bureaus, also known as credit reporting agencies.

Your credit score

Your credit score is a three-digit number that comes from the information in your credit report. It shows how well you manage credit and how risky it would be for a lender to lend you money.

Your credit score is calculated using a formula based on your credit report.

Note that you:

get points if you use your credit responsibly

lose points if you have trouble managing your credit

Your credit score will change over time as your credit report is updated.

How a credit score is calculated

It's impossible to know exactly how much your credit score will change based on the actions you take. Credit bureaus and lenders don't share the actual formulas they use to calculate credit scores.

Factors that may affect your credit score include:

how long you've had credit

how long each credit has been in your report

if you carry a balance on your credit cards

if you regularly miss payments

the amount of your outstanding debts

being close to, at or above your credit limit

the number of recent credit applications

the type of credit you're using

if your debts have been sent to a collection agency

any record of insolvency or bankruptcy

Lenders set their own guidelines on the minimum credit score you need for them to lend you money.

If you have a good credit score, you may be able to negotiate lower interest rates. However, when you order your credit score, it may be different from the score produced for a lender. This is because a lender may give more weight to certain information when calculating your credit score.

Who creates your credit report and credit score

There are two main credit bureaus in Canada:

These are private companies that collect, store and share information about how you use credit.

Equifax and TransUnion only collect information from creditors about your financial experiences in Canada.

Some financial institutions may be willing to recognize a credit history outside Canada if you ask them. This may involve extra steps. For example, you may request a copy of your credit report in the other country and meet with your local branch officer.

Who can see and use your credit report

Credit bureaus follow rules that define who can see your credit report and how they can use it.

Those allowed to see your credit report include:

banks, credit unions and other financial institutions

credit card companies

car leasing companies

retailers

mobile phone companies

insurance companies

governments

employers

landlords

These businesses or individuals use your credit report to help them make decisions about you.

These decisions could be to:

lend you money

collect a debt

consider you for rental housing

consider you for a job

provide you with insurance

offer you a promotion

offer you a credit increase

A lender or other organization may ask to "check your credit" or "pull your report". When they do so, they are asking to access your credit report at the credit bureau. This results in an inquiry in your credit report.

Lenders may be concerned if there are too many credit checks, or inquiries in your credit report.

It can seem like you're:

urgently seeking credit

trying to live beyond your means

Consent and credit checks

In general, you need to give permission, or your consent, for a business or individual to use your credit report.

In the following provinces a business or individual only needs to tell you that they are checking your credit report:

Nova Scotia

Prince Edward Island

Saskatchewan

Other provinces require written consent to check your credit report. When you sign an application for credit, you allow the lender to access your credit report. Your consent generally lets the lender use your credit report when you first apply for credit. They can also access your credit at any time afterward while your account is open.

In many cases, your consent also lets the lender share information about you with the credit bureaus. This is only the case if the lender approves your application.

Some provincial laws allow government representatives to see parts of your credit report without your consent. This includes judges and police.
Contact your provincial or territorial consumer affairs office for information on laws related to credit reporting.
What's included in your credit report

Your credit report contains personal, financial and credit history information. In general, it takes 30 to 90 days for information to be updated in your credit report.

Personal information in your credit report

Your credit report may contain your:

name

date of birth

current and previous addresses

current and previous telephone numbers

social insurance number

driver's licence number

passport number

current and previous employers

current and previous job titles

Financial information in your credit report

Your credit report may contain:

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 car lien, that allows the lender to seize it if you don't pay

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 make your payments on time

if you miss payments

if your debt has been transferred to a collection agency

if you go over your credit limit

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

Your credit report can also include chequing and savings accounts that are closed "for cause". These include accounts closed due to money owing or fraud committed by the account holder.

Other accounts included in a credit report

Your mobile phone and internet provider may report your accounts to your credit bureau. They can appear in your credit report, even though they aren't credit accounts.

Your mortgage information and your mortgage payment history may also appear in your credit report. The credit bureaus decides if they use this information when they determine your credit score

A home equity line of credit ( HELOC) that is added to your mortgage may be treated as part of your mortgage in your credit report. If your HELOC is a separate account from your mortgage, it is reported separately.

Why your credit history matters

It can affect your finances

Financial institutions look at your credit report and credit score to decide if they will lend you money. They also use them to determine how much interest they will charge you to borrow money.

If you have no credit history or a poor credit history, it could be harder for you to get a credit card, loan or mortgage. It could even affect your ability to rent a house or apartment or get hired for a job.

If you have good credit history, you may be able to get a lower interest rate on loans. This can save you a lot of money over time.

It can show signs of identity theft

You can also use your credit report to check for signs of identity theft. This is something you should do at least once a year for both credit bureaus. Look to make sure someone has not tried to open credit cards or other loans in your name.

Related links

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credit report; credit score; what is a credit report; what is a credit score; credit bureaus; credit check; credit checks; credit history; credit score check; credit reporting agencies; credit report check; credit agenies

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Who creates your credit report, who can see it and what it includes.

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This picture outlines the differences between a credit rating and a credit score. There are a lot of similarities between the two terms and often the term credit rating is used to describe a credit score. I choose to include this image as it defines and differentiates credit rating and credit score. This image can be used as a reference to better understand the terminology.

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A brief summary of the factors that will influence the credit rating of an individual (payment history, amount owed, length of credit history, types of credit, new credit). Your credit score can change every month. It is recommended that you check your credit report annually because if your credit report is accurate, you will have an accurate credit score. You don't need to check your credit score all the time, the best time to check your credit score would be before making a large purchase.

I included this video as it provided a summary of what credit scores are, how they are calculated, and when to check your credit score/report. The information that was most useful from this video to me was that new credit applications can be referred to as a "hard hit" and can impact your credit score, versus checking your own credit score is a "soft hit" and won't negatively affect your credit score. However, they don't recommend that you need to check your credit score frequently, instead check your credit report annually for errors.

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Credit Score Tips & Advice Canada - Top Things You Need to Know About Your Credit Score

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This website provides an example of a credit report from TransUnion Canada. At the top of the report, you will see personal information listed that includes name, date of birth, telephone number, employer, and address. Next, if you provided the credit reporting agency a statement it will be shown here as the consumer statement. Following the consumer statement (if included), is a summary of the credit report. A legend explains how TransUnion uses symbols to describe payment history in each account during the past two years. Each account is then listed with a description of the type, when it was opened, condition, pay status, balance, payment, and responsibility.

I choose to include this website as TransUnion is one of the most commonly used providers of credit reports. Credit reports have a huge influence on your credit rating as they provide a summary of your credit history, which is the most influential factor when analyzing a credit score. I found it useful to see an example of a credit report from TransUnion, and would be a good website to reference to compare (and assess for errors) if you receive your own credit report from TransUnion.

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Note:

This example is for illustration purposes only and may not include all information typically provided in a credit report or score. FCAC has modified the presentation for online display. This example may not appear in exactly the same way as the credit report or score you receive from a credit reporting agency.

CHERYL CONSUMER

Consumer credit profile
Source: TransUnion

Credit report date: 07/21/2012
Name:Cheryl Consumer
Date of birth:08/1973(905) 308-7596
Employer: EMPLOYER
Date updated: 09/2006

Current address:
170 Jackson St,
HAMILTON, ON
L8N 3K8

Previous address:
37 Connolly ST,
CHARLOTTETOWN, PEI
C1A 2L8

None reported
If you gave the credit reporting agency a consumer statement, it will be included here. For more information, see the section "Steps to correct errors."
At-a-glance viewing of your payment history

This legend explains the symbols used to describe your payment history for your accounts below.

TD/GM VISA
The series of "OK" symbols for these accounts shows you made all your payments on time during the past two years. Check for errors and accounts that are not yours. Two year payment history: Two year payment history:
______________________
Source: TransUnion Canada

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Sample Credit Report from TransUnion Canada - Canada.ca

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This example is for illustration purposes only and may not include all information typically provided in a credit report or score. FCAC has modified the presentation for online display. This example may not appear in exactly the same way as the credit report or score you receive from a credit reporting agency.

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Credit is comprised of your credit history (your borrowing history), your credit report (a summary of your credit history), and your credit score (a number that represents your risk). There are five main factors that influence your credit score: payment history, credit utilization, number of credit inquiries, length of credit history, and credit type. Credit ratings are a system created and used by credit reporting agencies that show how and when you make payments. Letters are used in your credit rating to categorize the type of credit. Each letter will be accompanied by a number, ranging from 0 to 9 based on when payments for each credit have been made. "0" represents that the credit is too new to be rated. "1" represents that all payments have been made within 30 days of billing. The score gets progressively higher as payments are later.

This website is included to explain what credit ratings are and how they are used to categorize your credit history. This resource is especially useful as it clearly breaks down what each letter and number represent in a credit rating.

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Consolidated Credit Counselling Services of Canada

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Credit is something many of us take for granted.

If you have good credit, you should have no problem borrowing money at the best interest rates with the most favourable terms and conditions. If you're able to pay for your home, car and other assets in cash, you may not care about your credit score, but for everyone else, building a good credit score is important.

A good credit score isn't just for bragging rights. It comes with many benefits. A mortgage is the single biggest debt of most people's lifetime. If you have a good credit score, you're more likely to qualify for the mortgage with the most favourable terms and conditions and the lowest interest rate, helping you keep more of your hard-earned money.

Let's take a closer look at your credit and why it matters. After that, we'll look at what's a credit rating and the various credit ratings.

What is credit and why does it matter?

Your credit consists of three parts: your credit history, credit report and credit score. Your credit history is a summary of your borrowing history. It's a recap of each and every time you've borrowed funds. This includes your car lease and it may include the credit card you forgot to pay in university. Meanwhile, your credit report is a recap of your credit history in a more consumer-friendly format.

Last, but not least, is your credit score. Your credit score is the figure that lenders care so much about. Lenders use your credit score to help decide whether your loan application goes into the approve or reject pile. The higher your credit score, the more likely you are to get the lowest interest rates. Credit scores typically fall between 300 and 900.

There are two major credit reporting agencies in Canada- Equifax and Transunion. Equifax and Transunion are firms that calculate and keep track of your credit history, credit report and credit score. If you want instant access to your credit score, you're required to pay; otherwise, you can request a copy of your credit report for free, once per year. To do that, you must download and fill out the credit report request forms from the Equifax and Transunion websites. (And before you ask, no, it won't lower your credit score to request a copy of your own credit report.)

Reviewing your credit report at least once a year is a good practice. If you're planning to make a major purchase, such as a home, it's also a good idea to review your credit report. If you see a blemish on your credit report, it'll give you time to correct it. (It sometimes takes a while due to a delay on lenders reporting your credit history.) Likewise, if your credit score is lower than you thought, you'll have the time to take the steps necessary to improve it.

The Five Factors of Your Credit Score

There are five main factors that impact your credit score. By understanding the five factors, you can help maximize your credit score.

Payment History

The first factor is your payment history, which affects your credit score the most. Your payment history relays whether you've made your payments on time. The following can negatively affect your payment history:

Making payments late

Missing payments

Your debts go to collections

You file for bankruptcy

To maintain a good credit score, always aim to pay your accounts by the due date. If you can't afford to pay off the full amount, at least make the minimum payment.

Credit Utilization

The second most important factor in your credit score is your credit utilization. Credit utilization is just a fancy word for how much of your total available credit you're currently using. To calculate your credit utilization, take your credit limit and subtract your current outstanding balance from it. Ideally, you want an overall credit utilization of less than 35 percent. If you must go over, make sure you never use more than 70 percent of your available credit. It can adversely affect your credit score. Lenders will get concerned that you're getting close to being maxed out.

How Many Credit Inquiries

Only apply for credit if you really need it. Having too many credit inquiries within a short timespan can negatively impact your credit score. Each time you apply for credit, it counts as a credit inquiry. A credit inquiry means that the lender is requesting a copy of your credit report for borrowing purposes. If a lender sees a lot of credit inquiries, it may hesitate to lend to you, since it will draw the conclusion that you're applying after being turned down by other lenders, when that may or may not be the case.

Length of Credit History

Lenders like to see that you have a history of consistently making your payments on time. The longer you have a credit account open, the better it is for your credit score. Closing an old account can lead to your credit score dropping.

Credit Type

If you have just one type of credit, it can hurt your credit score. Try to mix it up with credit cards, loans and lines of credit (just make sure you use your credit responsibly).

What is a credit rating?

Credit ratings are a system by the credit reporting agencies about how and when you make your payments. Credit reporting agencies like Equifax and Transunion aren't the only ones who use credit ratings. Lenders may use them as well when reporting information to credit reporting agencies.

A letter and a number make up a credit rating. For example, you might have a credit rating of R1 on your credit card, indicating that you've paid your credit card on time throughout its history. Bravo!

The letter in your credit rating stands for the credit type you're using.

"I" stands for "Installment" credit: When you borrow money for a specific time period and you regularly pay it back in fixed amounts until the loan is fully repaid. An example of installment credit is a car loan.

"O" stands for "Open" status credit: When you borrow money as needed, up to your credit limit. An example of open status credit is a line of credit.

"R" stands for "Revolving or recurring" credit: When you're able to borrow money up to a certain limit on a regular basis. You can make payments in different amounts depending on your account's outstanding balance. This is the most common credit type. An example of revolving or recurring credit is a credit card.

"M" stands for "Mortgage" loan: If you have a mortgage on a property, it may appear on your credit report.

There will also be a number in your credit rating. The number will be between 1 and 9.

The number "1" is the best rating you can get. You want to aim for this credit rating on all your accounts. It indicates that you pay your accounts on time (within 30 days of the billing date). The more accounts with a credit rating of 1 that appear on your credit report, the better. It will go a long way in helping you achieve a good credit score.

Any number above 1 is likely to have a negative impact on your credit score. The worst credit rating you can get is 9. It usually indicates the lender has written off the debt or the debt has been sent to collections.

"0" means the account is too new and you lack the credit history for it to be rated or it has been approved, but you haven't used it yet.

"1" means the account has been paid as agreed upon within 30 days of billing. The payment is considered on time. You have a history of making your payments on time throughout the account's history. You should strive for this credit rating with all your accounts. The more 1 ratings on your credit report, the higher your credit score is likely to be.

"2" means you've made a payment that's between 31 and 59 days late. This essentially means that you've missed a payment. On its own it's not terrible, but it can lead to lenders coming up with their own negative opinion on you.

"3" means you've made a payment that's between 60 and 89 days late. This means that you missed two payments in a row. This credit rating is likely to grab the attention of lenders. You may have difficulty opening credit with this rating.

"4" means you've made a payment that's between 90 and 119 days late.

"5" means you've made a payment that's more than 120 days late, but doesn't yet have a rating of "9."

"6" isn't used by the credit reporting agencies.

"7" means that you're making payments under a consumer proposal, consolidation order, orderly of debts or a debt management program with a credit counselling firm.

"8" means that the lender is attempting to repossess your assets to recover the money you owe.

"9" means that the debt has been written off as "bad debt," it has been sent to collections or you've filed for bankruptcy.

All of the debts that appear on your credit report should have a credit rating. The codes will differ depending on the credit type and whether you make your payment on time. For example, if you have a credit card and you pay it on time, it will have an "R1" rating on your credit report. If you have a car loan and you missed a payment by 45 days, an "I2" rating would appear on your credit report.

Conclusion:

In this article, we took an in-depth look at credit. We looked at what is credit and why does it matter, the five factors of your credit score and what is a credit rating. After reading this article, you should have a much better understanding of your credit report and how to read it.

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If you have good credit, you should have no problem borrowing money at the best interest rates with the most favourable terms and conditions. If you're able to pay for your home, car and other assets in cash, you may not care about your credit score, but for everyone else, building a good credit score is important.

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https://www.thebalance.com/what-is-a-beacon-credit-score-5193695
Credit scores can vary based on how they are analyzed and which factors are taken into consideration. The Beacon credit score is an algorithm commonly used in Canada by lenders to determine the risk of borrowers. Beacon 5.0 and Beacon 9 scores are based on the FICO credit score. The FICO credit rating is calculated based on payment history, amounts owed, length of credit history, new credit, and types of credit used.

This website was included as it gives a more depth description of the Beacon credit score, which is commonly used by lenders in Canada. This website reveals that there are different algorithms used by lenders to calculate a credit score and different variations of a FICO score (including Beacon scores).

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Beacon credit scores, issued by Equifax, are based on the FICO credit scoring model. Learn what Beacon scores are, how they work, and how they affect your credit.

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Your credit report is a summary of your entire credit history (active loans, payment history, and credit limit) and is highly influential in your credit score. In Canada, credit scores are commonly managed/calculated by Equifax and Transunion. Your credit score ranges from 300 to 900, with a higher score being better. The higher your credit score the easier it will be to loan money. Paying bills late will significantly decrease your credit score. Errors on your credit report or identity theft will also influence your credit score. Being a newcomer to Canada will influence your credit score as you will not have any credit history in Canada.

I included this video as it provides a unique perspective of newcomers to Canada and how this would affect your credit score. The creator of the video was a Newcomer to Canada and had to start building credit from nothing. He provides his own experiences with credit and ways Newcomers to Canada can start to create a positive credit history/score.

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CREDIT SCORE IN CANADA - Explained (For Newcomers & Beginners)

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Millennials are checking their credit scores more often than ever. However, according to the results of a survey by Equifax there are many credit myths that are still misunderstood. In the video, the misconceptions are explained:
1. Your income will not affect your credit score - TRUE
2. You have more than one credit score - TRUE
3. Checking your own credit score decreases your credit score - FALSE
4. If you avoid using credit you will have a higher credit score - FALSE
5. Credit reports don't include your RRSP - TRUE
6. Married people have a joint credit report - FALSE
7. Missed credit card payments will stay on your credit for 7 years - TRUE

I included this video because it highlights that people are checking their credit scores more often. Despite this, there are still many myths about credit believed by the general public. This video was helpful in clarifying common misconceptions about credit. I found it particularly interesting to learn that your income is not part of the analysis of a credit score, however, it will influence your credit score as having a higher income may allow you to make payments on time consistently.

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This video has three people of different financial backgrounds get their credit scores from Equifax, TransUnion, Credit Karma, and Borrowell. Each person found that their credit scores varied significantly and were dependent on which website was used. Next, the participants bring their credit scores to lenders to see if the credit score that the consumer provided would influence their borrowing ability. The lenders did not accept the credit scores that were brought by the partcipants as they are required to conduct their own credit report that includes a Beacon score. The companies of Equifax, TransUnion, Credit Karma, and Borrowell are to be used for educational purposes only and based on the results of the video do not seem to be used by borrowers to assess risk.

I choose to include this video because it demonstrates how different companies use different algorithms for calculating a credit score. As a result, one person can have a large difference in credit scores dependent on which company provided it. I found it especially interesting to learn that companies such as Equifax, TransUnion, Credit Karma, and Borrowell all have disclaimers that they are to be used for educational purposes only.

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Equifax, TransUnion, Credit Karma, Borrowell: Should you trust your credit score? (Marketplace)

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This image provides a quick reference as to what the different major factors are in creating a credit score and how they are weighted. The payment history looks at if you are late in payments, and if there are late payments how late they are. The amount owed looks at how much debt is owed and how much credit you still have available to use. The length of credit looks at how long you have had a credit for. The types of credit are the variety of credit that you have. New credit is how often you apply for credit.

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1. What did you learn about your topic that surprised you the most?

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1. What did you learn about your topic that surprised you the most?

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I was the most surprised to learn that there is not only one way to calculate a credit score and your credit score can vary significantly depending on who provides it. Additionally, I was surprised to learn that the exact algorithm used by companies and lenders is not shared/available for the general public to view.

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2. Provide a real-life example of how this topic is relevant or interesting for you. 

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2. Provide a real-life example of how this topic is relevant or interesting for you. 

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This topic is relevant to me as I recently looked at my credit score and had found that it was lower than I had expected. I consistently pay at least the minimum payment on time and so had expected my credit score to be higher than it actually was (as calculated through my online banking website). This low credit score had prompted me to investigate my credit in more detail. When looking back at my credit history, a few years ago I had a credit card with a store that I had missed payments on. I then ensured that the credit card was now fully payed off as to not further damage my credit rating.

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If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

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If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?

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The most important information that I learned if you (as a consumer) were to get your credit score from companies such as Equifax, TransUnion, Credit Karma, or Borrowell, this score is for educational purposes only and likely not used by lenders. It might be helpful to look at your credit score before making big purchases to ensure that there are no errors on your account. However, it is more important to request and view your credit report annually to ensure that there are no error.

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Through viewing the websites, videos, and images on this board you can expect to learn more about credit ratings and credit scores. Credit ratings are used by credit agencies to represent your payment history (the types of credit you have and if you make payments on time). A credit score is a numeric value based on credit history that lenders use to assess your risk as a borrower. This board will further discuss the differences between credit ratings and credit scores are, and what goes into the analysis that results in a credit rating.