Your credit report is a record of your credit history and shows how you have managed debt over time. When you want to secure a new loan or credit facility, the lender takes a look at your credit report to assess your creditworthiness.
Anyone viewing your credit report is able to see for how long you have had your loan (credit) accounts, how much you owe, if you pay your bills on time or have missed payments, and how much of your available credit has been used.
Here’s what a typical credit report may contain:
1. Personal Information
This includes your name, current and past addresses, Social Insurance Number (SIN), date of birth, current and past employment, telephone numbers, etc.
2. Credit Accounts and History
This is a list of credit accounts available to you including loans, credit cards, line of credit, retail or store cards, and mobile phone contracts. It also shows when these accounts were opened, the credit amount or limit, account balance, and your payment history. It may also show closed credit accounts.
3. Public Records and Collections
These include information such as bankruptcies and lawsuits. If you have a lien against any of your assets, or have been referred to a collections agency, this is also recorded.
4. Credit Report Inquiries
Inquiries from individuals or organizations for information relating to your credit report are noted here. Anyone requesting a copy of your credit report is required to seek your consent first. For example, when you apply for a new credit card, they either ask you to give them consent to run a credit check, or you will find it somewhere on the application form you complete. “Soft inquiries” are visible to only you and not to creditors.
5. Consumer Statements
If you have ever had to dispute something entered on your credit report, you can request that credit bureaus include a consumer statement on your credit report. This is an opportunity for you to explain something negative that is present on your credit report.
How To Read Your Credit Report
When you request your free credit report from Equifax or TransUnion, you will find that they use various codes to denote your credit rating. This is what the letter codes stand for:
I – This refers to Installment loans such as a car loan or mortgage. They are loans that you pay back in fixed regular amounts until your debt is paid in full. Mortgages may also be denoted using letter “M.”
O – Refers to an Open credit facility that allows you to borrow money whenever needed up to a certain limit. An example of this is a line of credit.
R – Refers to a Revolving or recurring credit. This type of credit allows you to borrow money up to a certain limit. You are required to pay interest and a minimum amount based on your credit balance. An example is a credit card.
This is what the number codes stand for:
0 – Account is too new to rate; or is approved but not yet in use
1 – Paid within 30 days of billing, or pays within the agreed time period
2 – Late payment that is 31 to 59 days late
3 – Late payment that is 60 to 89 days late
4 – Late payment that is 90 to 119 days late
5 – Late payment that is more than 120 days late, but is not yet rated a “9”
6 – This number code is not used
7 – Account is being paid using a debt management program, consumer proposal or consolidation order
8 – Repossession
9 – Account is considered a “bad debt” and has been sent off to collections or borrower has declared bankruptcy
A simple example to show how these codes (letters and numbers) are combined and used is:
- R1: This could refer to a credit card account that is in good standing because the account owner pays their outstanding balances on time.
Related: How Your Credit Score is Calculated
How Long Does Negative Information Stay On Your Credit Report?
“Negative Information” refers to information on your credit report that impacts your credit rating negatively. By law, negative information can only stay on your credit report for a limited number of years. In general, most negative information is removed after 6 years, however, the time-frame may be longer or shorter depending on the credit bureau and province.
- Judgements: These stay on your file for 6 years. However, TransUnion may keep them on your credit report for 7 years in Ontario, New Brunswick, Quebec, and Newfoundland and Labrador; or 10 years in Prince Edward Island.
- Collections, Closed Bank Accounts due to unpaid debt or fraud by account owner, and NSF: Remain on credit report for 6 years.
- Inquiries: Equifax (3 years) and TransUnion (6 years).
- Bankruptcy: 6 years. TransUnion will keep for 7 years in ON, Que, NB, NL and PEI. Multiple bankruptcies are kept on file for 14 years.
- Consumer Proposal: 3 years
Credit bureaus may also vary on what date they start counting from. For more details on the length of time that credit reporting agencies keep information, check out the Financial Consumer Agency of Canada’s list.
Related: 10 Ways To Improve Your Credit Score