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Applying for Credit

When a business decides whether or not to extend credit to you, they must balance their desire to sell you a service or product against the inconvenience of not being paid right away and the risk of not getting paid at all.

The business will ask for information from you to help them assess the risk of giving you credit. Some of the things they may ask for are proof of income, employment history, a statement of assets and debts, whether you own your home, how long you have lived at your current residence, and marital status. Most will also check your credit report and credit score.

The information is collected by a Credit Reporting Agency. In Saskatchewan, The Credit Reporting Act licenses and regulates credit reporting agencies. All credit reporting agencies must be licensed. These agencies have a responsibility to provide accurate and fair information. The two Credit Reporting Agencies in Canada are Equifax Canada and TransUnion Canada.

Credit Reports

A credit report contains information about your credit history and some personal information. This information can be provided by creditors or lenders or taken from public records.

What is in a Credit Report?

Credit reports generally include the following types of information:

Identifying Information...

  • your name
  • your address
  • your Social Insurance Number
  • your date of birth

The identifying information may also have information about your employment. This information is not used when calculating your credit score.

Credit Account Information from Lenders...

  • type of credit accounts (credit card, bank loan, mortgage, car loan etc.) you have
  • date each account opened
  • credit limit or loan amount for each account
  • balance owing
  • your payment history

Inquiry Information

  • inquiries made by you, someone who has lent you money or someone who is offering to lend you money (do not impact your credit score)
  • inquiries made by a lender you have asked to loan you money or by a credit card company you have applied to for a credit card (can impact your credit score)

Public Record Information

  • records of bankruptcies
  • court records

Collections Information

  • past-due accounts turned over to a collections agency

What cannot be in a Credit Report?

Any information included in a credit report must be based on the most reliable evidence reasonably available. Information cannot be included in a credit report unless the name and address of the source of the information is also included or can be readily determined by you. Providing false information to a Credit Reporting Agency is an offence that can result in a fine and/or jail time.

The following information cannot be included...

  • unfavourable personal information unless reasonable efforts have been made to ensure its accuracy
  • information about a first-time bankruptcy that was discharged six years or more ago
  • information regarding debts, fines, criminal convictions or other information that is unfavourable to the consumer that is more than six years old
  • information about criminal charges that did not result in a conviction
  • information about the race, creed, colour, ancestry, ethic origin or political affiliation of the consumer

Other information is allowed but subject to certain conditions. Information about a court action cannot not be reported 12 months after the action was started unless the current status is determined and included in the report. Information about a judgment cannot be included without the name of the person who has a judgment against the consumer and the amount of judgment.

Who can see my Credit Report?

The information in your credit file can only be released to certain individuals, such as someone who requires the information to make a decision about your application for credit, insurance, employment, tenancy or other legitimate business purpose. The person requesting the credit report must get your consent or give you written notice that a credit report will be obtained and provide you with the name and address of the credit reporting agency that will provide the report.

Identifying information, such as your name, address, and place of employment can be released to government or police agencies without your consent and without notice.

Getting your Credit Report

Asking for a credit report will not affect your credit rating but information from your application for a credit report can be used to update your credit report. Your credit report is not the same as your credit score. You will generally have to pay to receive this.

You can order a free copy of your credit report from either or both of the Credit Reporting Agencies. People sometimes order from both because the two different companies can have different information. Both companies refer to this as consumer disclosure. You can order your report by mail or fax using the forms provided by Equifax and TransUnion. You must also provide copies of two pieces of acceptable identification such as a drivers’ licence or a passport.

You can request your report by calling Equifax toll-free at 1-800-465-7166 and TransUnion toll-free at 1-800-663-9980. In this case you will have to answer personal and financial questions to confirm your identity and you may be asked for your Social Insurance Number or a credit card number to confirm your identity.

Your credit report will be mailed to you. You can choose to pay a fee and see your credit report online instead. TransUnion allows consumers to view their report online once a year for free.

Inaccurate Information

Although it is an offence to knowingly supply false or misleading information to a credit reporting agency, mistakes can occur. If you think there is inaccurate information on your credit report you can dispute it. Information about the dispute process can be found on both the TransUnion and the Equifax sites. You can submit a dispute online or complete and mail the forms provided by TransUnion or Equifax along with the required documentation. TransUnion also takes these requests by toll-free phone at 1-800-663-9980.

Credit Reporting Agencies are required to investigate any information you dispute and remove or correct anything they find is inaccurate. The agency will also notify anyone that has received your credit report in the last twelve months about the corrections or deletions, unless you request otherwise.

If, after the investigation, the agency is still of the opinion that the information on file is reasonably accurate and should not be deleted, the agency will notify you of your right to file a brief statement outlining why you dispute the information. Once your statement is received your file will clearly note that the information is disputed. Your statement disputing the information will be attached to your credit report and from then on, form part of your credit file. As well, anyone who received a credit report in the preceding six months will be advised of the dispute, unless you request otherwise.

Credit Scores

Credit reports provide a summary of your financial history and include information about your borrowing activity and payment history. Your credit score is determined by using a statistical formula to take personal information from your credit report and other sources and translate it into a three-digit score. Lenders can then use this score to predict the likelihood that you will repay the debt.

Because TransUnion and Equifax may use different formulas your credit score with each company may be different. The type of information used to calculate your credit score includes...

  • Payment history - indicates whether you have made your credit card payments, loan payments and other payments on time
  • Amounts owed versus your available credit- compares how much you owe to your credit limits with various lenders
  • Length of time on file - indicates how long you have had credit accounts
  • New credit - shows how often you are looking for new credit and how you handle accounts you have recently opened
  • Type of credit - considers the type of loans you have - car loans, lines of credit, credit card balances
  • Inquiries about your credit report.

You can find out your credit score for a fee from either or both of the Credit Reporting Agencies in Canada.

Not Having a Credit Score

Having a bad credit score can cause problems when you apply for new credit. However, it can be just as much trouble to have no credit score at all. This can happen in a spousal relationship where only one of the partners manages or controls household finances. This may have significant consequences in the event of a relationship breakdown or the death of the partner with financial control. A bank or business might be reluctant to grant credit to a spouse without a credit record. The spouse may be denied credit altogether, or be forced to have someone co-sign or guarantee the indebtedness.

For this reason, it is important for spouses to establish their own credit rating. Keeping credit cards or charge accounts in their own name – when they are paid on time – can help spouses establish a positive credit score in their own right. Establishing a good credit score is something that either spouse can do on their own, without the consent or involvement of the other spouse.

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