Understanding Your Credit Report and Credit Score

[Source - Financial Consumer Agency of Canada]
If you have ever taken out a loan, used a credit card or taken advantage of a “buy now, pay later” offer, you will have a credit history.

Whenever a financial institution, such as a bank, a credit card company, or any other business gives you credit, it may send information about whether or not you make your payments on time to a credit-reporting agency. Credit-reporting agencies, also known as credit bureaus, are businesses that collect information about you and how long it takes you to pay back money you have borrowed. This information is called your “credit history”. When you want to borrow money in the future, the lender will check with a credit-reporting agency to see if you have a good credit history.

Having a good credit history is very important. If your credit history is poor, a lender can refuse to give you a loan. You may not be able to get a mortgage to buy a new house, or take out a personal loan. If the lender does decide to give you the loan, a poor credit history may mean you will have to pay a higher interest rate. A poor credit history can affect you in other ways, too. For example, a landlord may refuse to rent you an apartment because of a poor credit history.

A credit-reporting agency provides information about credit history in two ways, as a credit report and as a credit score.

The Financial Consumer Agency of Canada has published a very informative document providing tips about building and maintaining credit. To download the document - click here