Understanding Your Credit Report

Most people order a credit report in order to get their credit score. Your credit score can determine a number of things, including what your financial situation is, whether or not it can be improved, and what consequences that will have on your personal financial plan.

credit reportBut your credit report actually contains much more information in addition to your credit score. This information is equally important to any financial self-assessment, and it can be of value to understand the details of the report in order to find potential errors or misrepresentations that can be corrected to improve your score.

To help you better understand your credit report, we’ve assembled a step-by-step guide. We have found two sample credit reports from both Equifax and TransUnion (the two primary issuers of such reports in Canada). Both are slightly different from one another in terms of format, but are largely similar in terms of what they can tell you about your credit situation.
1. Equifax sample report
2. TransUnion sample report

Here’s what to know.

1. Personal information

personal information in credit report
This includes such information as your name, current and previous addresses, social insurance number, telephone number, date of birth, and your current and previous employers. It is crucial that this information is up-to-date and matches the information on your government-issued identification so as to avoid any confusion for third parties needing to do a search on your credit information.

2. Credit report inquiries

credit report inquiries
This section is comprised of a list of all those who have inquired about your credit. This may include you, any lenders, or any authorized organization. The latter is generally institutions such as banks, automotive lessors, home leasers, etc., but it may also include other organizations that request a financial profile of you as an individual. An unusual increase in the number of inquiries may negatively affect your credit score, so make sure to double check that all these inquiries actually occurred and are accurate.

3. Public Records

public record in credit report
Items that are listed here show financial-related events, such as bankruptcy or a credit-related court judgment against you in a lawsuit. Secured loans, which are backed by an asset (your property for example), may also appear in your credit report. Bankruptcies will show their status as having been discharged if the appropriate amount of time has passed.

4. Consumer statement

consumer statement
A consumer statement is any statement that you may have made to explain a particular situation, such as a dispute with a financial institution or a fraud warning.

5. Scoring of History Items

Some credit reporting agencies report the lenders’ rating of each of your credit history items on a scale of 1 to 9, with 1 representing good standing and 9 representing bad debt.

The most common ratings are “R” ratings, which stand for North American Standard Account Ratings and are the most frequently used. These ratings indicate that the item being described involves revolving credit. Ratings marked “I” indicate installment loans, and “O” denotes open credit (e.g. lines of credit), where you borrow money as needed up to a certain limit and the balance is due at the end of each period. Student loans may also fall into this category.

Here’s what each “R” rating stands for:

R00  Too new to rate; approved but not used

R1    Pays (or paid) within 30 days of payment due date or not over one payment past due

R2    Pays (or paid) in more than 30 days from payment due date, but not more than 60 days, or not more than two payments past due

R3    Pays (or paid) in more than 60 days from payment due date, but not more than 90 days, or not more than three payments past due

R4    Pays (or paid) in more than 90 days from payment due date, but not more than 120 days, or four payments past due

R5    Account is at least 120 days overdue, but is not yet rated “9”

R6    This rating does not exist.

R7    Making regular payments through a special arrangement to settle your debts (i.e., credit counseling)

R8    Repossession (voluntary or involuntary return of merchandise)

R9    Bad debt; placed for collection; moved without giving a new address or bankruptcy

With these categories clearly defined, you should be able to easily and better understand your own credit. Any discrepancies should be relatively easy to discover and point out. Remember: just don’t focus on the score number itself. Instead, ensure that your credit report looks stable and conflict-free across the various parameters that can be examined by a potential creditor.

Also read How to get your credit report for free and How often do my credit score and credit report get updated?

Want more financial advice? urLoan can help you rebuild your credit score and regain financial health sooner through our loans. Our approvals are based on employment and verifiable income, unlike any other traditional means of credit score used by such institutions as banks, or taking security on your assets.

Learn more about how urLoan can help you with loans and call us at 1-855-723-5626.

Photo credit:
Credit report – http://www.wcbcf.ca/free-credit-report/