Reading a Credit Report

The information in an Equifax credit report varies slightly from a Transunion credit report, but both contain the same basic sections:

Personal information

This can include your name, address, previous addresses, birth date, social insurance number (SIN), and current and past employers. Check to make sure all this information is correct and up-to-date.

Inquiries

This section lists any people or companies who have asked for a copy of your credit report. Check to make sure no inquiries have been made without your permission. Having too many inquiries can have a bad effect on your credit score. Your own requests to see your own credit report do not affect your score.

Account information

This section contains information about all of your credit accounts. That includes loans, credit cards, department store cards, lines of credit, and consumer loans. The account information usually includes the creditor, account number, balance owed, credit limit, and the rating on your account.
All account ratings contain a number and a letter. The letter is an R, I, or O. This refers to the type of credit you have.

“R” stands for revolving credit. This is the kind of credit where you are given a limit up to which you can spend.
When you make a payment, that credit is ready to use again, so it ‘revolves’. Examples of revolving credit include credit cards, overdraft protection, and lines of credit.

“I” is for instalment credit. This is the kind of credit where you receive an amount of money all at once and then pay back in regular instalment payments until the balance is zero. Examples include a car loan, student loan, or mortgage. “O” stands for open credit. This is the kind of credit where you get a bill in the mail monthly and you are expected to pay it in full.

Examples include a phone bill or utility bill. These often do not report on a regular basis to the credit bureaus.
Each credit account also gets a number rating on a scale between 0 and 9. R1 means you pay your bills on time according to the terms of your credit agreement. R9 means you have not paid your bills as agreed and the account has been placed for collection.

For instance, you may have an R1 on a credit card if you pay it on time every month. At the same time, you might have R9 on a student loan you did not pay and that was sent for collection.

Rating Description

  • R0 = Too new to rate: approved but not used
  • R1 = Pays within 30 days of billing, or pays as agreed
  • R2 = Pays in more than 30 days but less than 60 or one payment past due
  • R3 = Pays in more than 60 days but less than 90 or two payment past due
  • R4 = Pays in more than 90 days but less than 120 or three or more payment past due
  • R5 = Account is at least 120 days past due but is not yet rated R9
  • R6 = No rating exists
  • R7 = Paid through a consolidation order, consumer proposal or credit counseling debt management program
  • R8 = Repossession of security
  • R9 = Bad debt or placed for collection or bankruptcy

These ratings affect how people will view your report and your credit-worthiness. Make sure that all the information in this section is correct.

Banking information

This contains information about any bank accounts you have. It will also include whether you have any Not Sufficient Funds (NSF), or ‘bounced’ cheques on your account.

Public information

This is any information about accounts that have gone to collections. It will say if you have ever been bankrupt It
also lists judgements made against you when a creditor has taken you to court.

Consumer statement

This is where you can add a statement to explain any of the information on your report. For instance, if you received a poor rating on one of your accounts, you could explain that you were unemployed for a time or that you suffered a set-back due to illness.

Credit scores

A credit score is a score between 300 and 900 that credit bureaus use to rate the information in your credit report.
Credit bureaus use a mathematical formula based on many factors to arrive at your credit score.
There are 5 main factors used to arrive at your credit score. They do not all have equal weight. Some count for more than others do.

Payment history (35%)

This factor carries the most weight. Lenders are most concerned with your past borrowing and whether you repay your debts on time. Paying bills late or having unpaid accounts sent to collections will lower your score.

Amounts owed (30%)

This factor compares the amount of debt you have to the amount of credit available to you. The closer you are to your credit limit, the more it affects your score.

Length of credit history (15%)

This factor looks at how long you have been using credit. It can help your credit score if you keep accounts open that you’ve had for a long time.

New credit & inquiries (10%)

Every time you apply for new credit, it is recorded as an ‘inquiry’ on your report. If there are a lot of inquiries on your report, it can lower your score. Lenders may wonder why you are applying for so much credit at once.

Types of credit (10%)

Having different types of credit can improve your score. It shows you know how to manage different forms of credit, such as credit cards, lines of credit, car loans, and student loans.

Other factors that affect your score

  • If you have had accounts turned over to collections, it can lower your score a lot.
  • If you have filed for bankruptcy, it can lower your score a lot.

Factors that do not affect your score

  • Inquiries that you make into your own credit report will not affect your score.
  • Mortgage information may appear in your credit report, but it is not used to calculate your credit score.

G14

November 12, 2014
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