Credit history is important to all lenders. Every time you apply for a loan, whether you are purchasing a vehicle, applying for a mortgage or trying to increase the limit on your credit card a lender will review your credit report to assess your financial background.
In Canada there are two companies that compile your credit information, Equifax Canada and Trans Union Canada. Lenders may use either of these, and sometimes both in order to accurately assess your credit history. These reports indicate current loan information including the name of your creditors, outstanding debt, and your payment history.
It’s recommended that you request to view your own credit report every few years to make sure there are no discrepancies. When applying for a loan, it’s important to know what your credit report looks like, and verifying its accuracy serves as a safety measure against fraudulent activity. For more information about Equifax Canada and Trans Union Canada please log on to their respective sites.
Establishing good credit
1. Review your credit report.
Establishing good credit begins with knowing what your credit report looks like. Obtain a copy of your credit report to make sure your information is accurate. Verify your personal information as well as your credit history. If incorrect information is being reported, follow the appropriate steps to dispute the information. To get a credit report free of charge, contact Equifax Canada or Trans Union Canada.
2. Establish good credit references.
Maintain good relationships with creditors you already have. A stable relationship with your bank, credit union, or financial lender is important when applying for additional credit; it demonstrates your dedication to maintaining current accounts.
3. Make payments on time.
Budget your income to make timely payments. One year of positive credit is necessary to be considered by most lenders. Start now so it will be in good standing when needed.
4. Open a savings account.
Find a bank with the most economical fee structure to suit your needs. Make regular deposits and avoid too many withdrawals. Close inactive accounts making sure no outstanding payments remain.
5. Apply for a secured credit card.
With a savings account, some banks will offer you a credit card. This is called a secured credit card because your savings serve as collateral on what you buy.
6. Get new credit.
If you can not obtain credit through a financial institution, apply for a department store or a gasoline credit card. These types of cards are easier to obtain because they offer lower credit limits, usually at higher rates. Hint: Use it only when you can pay the monthly balance in full.