How To Read Your Credit Report
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Why Do You Have a Credit Report?

If you have ever financed a house, a car, or even just bought a credit card, then you have a credit report. Your credit report contains information on any loan you have taken out within the last six years and how timely you paid those loans. The credit report also contains information on how much you owe, what your credit limit is on each of your accounts, and a list of the credit granting companies authorized to access your file. Companies that are considering granting you any form of credit will have access to this report and will want to see a long history of loans being paid on time.

Understanding Your Credit Score

Frequently referred to as a credit rating, a credit score, a beacon score, or a FICO score, this score is a separate part of the report. Essentially, your credit score is mathematically formulated from the data in your credit report into a three digit number creditors use to base their lending decisions on. Typically, the numbers go from 300-900 with the higher numbers being better and associated with less financial risk. A score between 750 and 799 is considered near average with 27 percent of the population falling within this range. Data collected on people within this credit range statistically demonstrates that only 2 percent of people in this category will default on their loan. This means, if you fall within this range you are very likely to receive any loans that you have applied for. Mortgage lenders usually want to see a minimum score of 680 and having a score below 650 will make it quite difficult to receive a loan of any kind. Credit agencies use different formulas for calculating credit scores and they do not disclose how these formulas are calculated.

How Can I See My Credit Report?

You can request a free copy of your credit report once every year and credit agencies are legally obligated to provide this for you should you ask them for it. In Canada the two national credit bureaus are Transunion Canada and Equifax Canada. These agencies will not overly advertise the option to request a free report by mail and you will more easily find links directing you to instant access credit reports at a cost of $14.95 with Transunion and $15.50 with Equifax. Lenders will not likely give you this information either as they are legally not supposed to provide this to you.

Fixing an Error in Your Credit Report

With hundreds of millions of entries and millions of filed reports, errors are more common than you might think. Checking your report at least yearly is important if you want to avoid unnecessary damage to your credit that could cost you money in higher interest rates or even get you declined. If you do find an error, you can write the credit agency to inform them of the error and they will send you a dispute form . Use the dispute form to describe the error precisely so it can be fixed. Paying attention for errors can be useful as a preventative measure against identity theft. For around $15 a month, monitoring agencies will monitor for suspicious activity on your credit report and alert you if they suspect you have become a victim of identity theft. Identity theft is on the rise and monitoring companies will allow you unlimited instant access to your credit report if you decide this product’s price is worth its value.