Category Archives: Credit Reports

Obtaining Your Canadian Credit Score

Long time readers will know that I request a free credit report by mail in about June, and pay for my online credit report and score in December of each year.

When I ordered my report and score this past December, I noticed that the sites of both Transunion and Equifax have become… labrynthesque, shall we say. It took me a good while to find the order forms that I was looking for, and I suspect that is because both companies want you to purchase their monthly monitoring option rather than the one time option. The monthly monitoring options were very easy to locate, by the way.

I feel most people would benefit from knowing their score on an annual or semi-annual basis, but would not suggest that the average person would need to know their credit score monthly.

  • At Transunion the one-time credit profile and score page can be found here and currently costs $22.90 (down considerably from the $30.85 I paid in 2009!!) Make sure you have the box checked to obtain your score.
  • At Equifax the one-time report and score can be found here and currently costs $23.95.

With both companies, you will only have online access to your score and report for one month, so it is a good idea to print out a hardcopy and save the file as a pdf.

Once you begin following your score over time, you can start to notice how your yearly activity affects your score. I rarely have hard-checks performed on my file, and pay my bill in full every month. This conservative use of credit has resulted in my score moving up about 1% per year. My score is quite high (2010 saw me improve to a score of 806 from 799 at Equifax, for example), so I think it takes more to move the needle. Someone with a lower score might see larger percentage increases after a year of good credit.

I am very interested to see my score this year, as I applied for a new credit card after I obtained my credit score… I’m looking forward to seeing where I go in 2011 as a result. I’ll have to wait until December to find out, however.

The following posts may also be of interest:

  1. A Primer to Credit Scores and Reports
  2. A Walk-through to Obtaining a Free Credit Report
  3. Checking Your Report for Errors
  4. Understanding Your Credit Report and Score (FCAC Site)

Free Credit Report: A Follow-Up

Back on June 11th I wrote a walkthrough to obtaining a free credit report from the two agencies in Canada. When I wrote that article, I also downloaded the forms and sent away, as I do every June.

I’m guessing that anyone who sent away when I did will have already received their report. The websites say that one can expect to receive the report 5 to 10 business days after they receive the paperwork. Since I first have to deal with a 10-day delay mailing from Japan to Canada, I only received my first report (from Transunion) today.

I thought I would give a second walkthrough in case anyone was not entirely sure what to look for in the reports.

Transunion:

Page 1 should just be an explanatory page, letting you know a little about credit reports and scores, why they have your file, and a Rosetta Stone of codes (M for mortgage, R for a normal credit card).

Page 2 begins your actual file. On this page you first want to look for any mistakes in your name, address or phone number. After that comes the meat of the report, which is a breakdown of all the accounts you have, and how well you have done paying them off. Again, you want to make sure there is nothing out of the ordinary in this. If there is a credit card listed that you don’t own, you will want to do some investigating.

You also want to check this page to see that all of your credit information is correct. If you know you have a $5000 limit, for example, but only $2500 is listed, you will want to have this corrected. This is important because part of your credit score is based on your credit ratio, which means how much of available credit you use. You should also check that your payment history is correct.

After your account history is finished, there should be a list of account inquiries, meaning any companies that have looked at your file. Some of these have no bearing on your credit score, others do. Look carefully and see if the inquiries make sense to you.

This is followed by a correction page. If there were any mistakes in your file, you should correct them on this page and send it back to Transunion.

Equifax

Equifax has a different layout, but the information is generally the same as Transunion.

Page 1 will tell you how long Equifax has been tracking your accounts, and gives a list of you current and previous addresses. Of course, you want to check this. Starting on this page, or possibly page 2, is a list of inquiries into your file. Again, make sure nothing looks strange.

Page 2 will probably begin your credit and banking history. Depending on your accounts, this may be several pages. But just like before, make sure that you know all the accounts on your file and that nothing looks out of the ordinary.

Following your banking and credit information, there should be an explanation about your files in general. And after this there should be a correction form that you should use if there are any mistakes on your file.

And that should be it. Depending on the complexity of your banking and credit accounts, there may be more pages or greater detail. I’ve tried to list just a basic outline of what to expect.

The main thing to remember is that you should look through everything to make sure there are no mistakes. Mistakes on your credit file mean that there may be a mistake in your credit score, which means you may be paying more in interest than your should be.

Free Credit Reports: A Walkthrough

About this time every year I try to remind myself to send away for a free credit report from both TransUnion and Equifax. Taking a look at your own report allows you to see how lenders view you, and also lets you check to make sure there are no mistakes.

In case some of you are unsure of how to get this information, I thought I would walk you through it.

First we’re going to download the report request forms from the two companies: Transunion and Equifax and fill them out. While providing your Social Insurance Number is optional, I have heard that it speeds up the process.

You will also have to photocopy both sides of two pieces of major ID, such as your driver’s license and passport, and submit that with your request form. Combined, the two pieces of ID should have your address, name, signature, and date of birth.

And that’s it. Mail them to the respective agencies (addresses on each form) and wait to get your free credit report.

I should point out that this is just your credit report. It has all the information about your credit history, but not your credit score.

Once you get it in the mail you want to check for mistakes and correct any if they exist. Mistakes may be as small as a mis-spelled street name, so take a good look. A good document to look through while you wait, and alongside the credit reports once you get them, is called “Understanding Your Credit Report,” which I have linked under “Resources” in the side-bar to the right.

Change Cards… Not Accounts

Banking can sometimes be a lot like baking. Change an ingredient and you change the result.

Sometime ago I changed my bank account to reflect my usage. I changed from a monthly fee to a free, pay per debit charge plan. The side-effect was that the fee on my credit card was no longer waived. The annual fee was less than the total monthly fees on the bank account, but it was still annoying.

I didn’t want to close my credit card account, however, because it had a 12 year history, and removing that would affect my credit score, which is something I want to keep relatively intact.

What I then thought about, and confirmed through a phone call, is that changing cards on the same account keeps the account in tact, so does not affect your score. Doing so keeps the same account active, and the information still flowing to the reporting agencies.

To clarify, your credit card is merely the piece of plastic. Your credit account is broader, and dates back to when you first applied for credit with a particular provider. In my case, I have had 3 credit cards on the same account. The first was a student card, the second was the normal version of the previous card that I switched to after graduation, and now a third card. However, my account is the same 12-year-old account.

You may not be able to switch from, say, a point card to an airmiles card, or a gas point card to a cash-back card (check with your provider), but you should be able to switch to a similarly structured card with the same provider. I switched to a no annual fee card that has the same point system (though it accumulates at a slower rate), so I can still use my points toward my RRSP or TFSA. I also ended up getting half of my last fee credited back to my account. The change also gives me some better travel insurance, and extended warranty of products bought with the card.

When it comes down to it, unless you are putting a lot of purchases on your card to justify the annual fee, you are probably better off with a no-fee card. Calling to change cards on the same account will save you money and leave your credit score untouched.

A Second Credit Card, Part 1.5

As I mentioned in an earlier post (which I consider part 1), I am in the market for a second credit card, and promised to explain why.

Don’t worry. I’m not in any financial trouble; far from it, actually. But we would like to buy a house or condo about 5 years from now.

What does that have to do with a second credit card?  Some time back I read on the Canadian Mortgage Trends blog that beyond having a good credit score, “lenders often want to see a minimum of 1-2 years of satisfactory payment history and at least two trade lines.”

Depending on which company is used, I have either a 799 or an 839 credit score, both of which are well above national averages. Still, the fact that my credit history is mostly made up of my 12-year-old credit card, a couple of inactive department store cards, and two student loans I paid off 3 years ago, it got me thinking.

Armed with print-outs of a recent credit score and report, I met with a mortgage specialist at my bank when I was in Canada last December, just to talk hypothetically. He said that based on my score and a look at my history, he would give me a mortgage at prime, but said/hinted that, yes, having a second active credit card would help, and maybe give me some more bargaining power if it had some history to it.

Since any mortgage is 5 years or so down the road, it seems like the best time to add a new card to my portfolio. First, it will give some history to the card. Second, it will take care of the second trade line. And third, by getting the card now, the effect of a lower credit score (which will happen as soon as I apply for new credit) will be made moot by the fact that it will be a five-year-old card by the time I look for a mortgage.

The only problem? In my search for my second card, I’m finding myself being very very picky. It  just may take me 5 years to select the one I want.

When Pre-Approved Credit is Good

Last night I called Visa about a few things. One of those things was to ask for a credit increase.

I don’t need a credit increase really, as I only use my credit card when I am back in Canada, but my current plan is take a temporary hit on my credit score in order to have a stellar report 4 or 5 years from now when we are  in the market to buy a place.

When I am back in Canada, I use my card for about 90% of my purchases. This results in using about 50% of my available credit. Having a high ratio (amount charged to amount available) is a bad thing for your score, so I wanted to increase my limit, so that when I travel the same purchases will only be about 30% of available credit.

The chap I was talking to said that I have a pre-approved credit increase available on my account. It was less than I was asking for, but by going this route I have achieved nearly the same effect without affecting my score.

The reason, as I was assured by the rep, is that pre-approved increases on existing accounts have no bearing on your score because it is a completely internal review; there is no inquiry into your entire credit report. It is completely based on your account history and the assets you hold with the bank.

Let’s be clear here. I am not talking about getting a piece of junk mail for a pre-approved card. That will affect your score if you apply, as it would be a new account. I am talking about a pre-approved increase on an existing card.

My next question for the lad was why I didn’t know about it. I have electronic statements, so shouldn’t I have gotten the offer by email? Not necessarily, he said. Some times the pre-approved increases are on the account, but are only mentioned if the customer happens to call.

It was nice to know that the companies aren’t always soliciting for more credit, but that there are instances where they will work with you if there is communication. That was a little reassuring.

A Primer to Credit Scores and Reports

Keeping tabs on your credit report and score is a good idea not only so you can make sure there are no mistakes on you file, but also so you can see how lenders see you, and be armed with that information when going into any negotiations.

Essentially, you credit report is a history of how you have used credit (cards, students loans, line of credit etc.) and how you have repaid it (on time, over 30 days late, in default or receivership etc).  Your credit score is a number between 300 and 900 (in Canada) that reflects all the information in your report.

There are currently two agencies in Canada that track this information: Equifax and Transunion. They get their information from the places you have a credit history.

You can obtain a free copy of your credit report by requesting in writing. Simply fill out the request application for each agency and mail it in. This free report will have all the information regarding your credit history… what cards you have, what student loans etc., and how you have repaid those loans.  To obtain your credit score, you will have to pay about $30 to each agency. When you order this, your updated report comes with it.

Be careful of one thing should you order your report and score: be sure to order the one time report. Both companies have an option whereby you pay a monthly fee of about $15 per month to have constant access to your file and score. There is absolutely no need for this. Ordering your report and score once a year from each company will suffice, and will only cost about $60.

I’m in the habit of ordering a free credit report in June, and ordering a full report and score in December. It allows me to check for any incorrect information that may be affecting me, and it also allows me to track my credit history.

While ordering or inquiring into your own file doesn’t affect your score, having many lenders looking at your score will lower it. By having a recent copy of your report and score printed out, you can bring that to lenders to talk about ball park numbers without affecting your score, and then have them check your official report once negotiations start to solidify.

An excellent place to start if you are new to credit reports and scores is this Government of Canada website. It is also in my sidebar under resources (Understanding Your Credit Report) should you need it in the future.