Many people don’t realize how important it is to maintain a good credit rating. Nor do they understand what is involved in achieving this.

The first step is to review your own individual credit bureau. You can contact your local credit bureau for a copy of this( usually for a nominal fee).

One thing to note when ordering is that there are two types of credit reports that can be requested; with or without your credit score (beacon score). It is more useful to order the version with the beacon score as this number plays a major role in the credit granting decision and can help you to determine if further steps need to be taken to improve your credit.

In Canada there are two major credit bureaus – Equifax and Trans Union. Each of these companies can provide you with a copy of your individual credit report.

Once you have a copy of your credit report there are a few things that should be checked.

  • Wrong mailing addresses
  • Incorrect social insurance number
  • Signs of identity theft
  • Errors in your credit accounts
  • Late payments
  • Unauthorized hard enquiries

The hard inquiries, done when you apply for new credit, can affect your credit score while soft inquiries, done by your existing creditors, requesting an update of your information, do not affect your score.

What is a Beacon Score?

Your beacon score is a predictive credit worthiness score. It forecasts the credit behavior of an individual for 2 years and ranges from 300 to 900.The higher the score the better it is for you.

For unsecured credit, lenders typically look for a score above 650. For mortgage lending, a credit score below 600 may subject your application to tighter scrutiny or higher interest rates and/or fees.

How long do items report on my credit report?

Inquiries remain on your report for three years after the date of inquiry. Your credit information remains for seven years from the activity date.

Consumer proposals will remain on your report for 3 years while the first bankruptcy reports for 6 years .Should you be unfortunate enough to declare bankruptcy twice or more, the second and subsequent times will report for 14 years each.

One can see how credit abuse can impede your ability to obtain credit in the future.

What about credit repair?

  • Only responsible credit practices over time can improve poor credit history.
  • Ensure timely payments with pre authorized withdrawals
  • Re-establish credit as soon as possible after being discharged from bankruptcy
  • If necessary obtain secured credit in order to re establish credit, with either a secured credit card loan or line of credit