Understand Your Credit

Your Beacon Score
Your Equifax Beacon Score is an "at a glance" indicator that lenders use to estimate your probability of successful loan repayment. Beacon Scores range from a low of 300 to a high of 900 with 900 being the highest possible score.

What's on your Credit Report?
The following information is contained in your Credit Report:

• Your personal information, including current address, social insurance number (SIN), date of birth, marital status, age and employment information.
• Your comprehensive credit information, including a full payment history on your trade lines that are reported to Equifax. (not all accounts report to Equifax)
• A history of your application for credit.
• Your banking information, including history and balances.
• Public record information about secured loans, bankruptcies and/or judgments.
• Details of outstanding collections owed to creditors.

Revolving credit (R) - Revolving accounts vary each month depending on how much you use them. Credit cards, charge cards and department store cards are all examples of revolving credit.

Installment credit (I) - Installment accounts have set amounts that have to be repaid each month. In these cases you will have arranged to borrow a specific amount of money up-front with an agreement to repay the loan in set amounts over a specified period of time. Examples of installment credit include car loans, student loans and mortgages.

Repayment History and Derogatory Accounts
Your credit report shows your repayment history on each account. If your account is up to date and you have paid the monthly requirement as agreed there is a "1" recorded for that month. If you miss one payment there will be a "2" showing for that month, meaning that you owed two payments for that period - the scheduled payment plus the missed one.

When an account has a "9" beside it ("I-9" or "R-9"), the lender will either file a judgment to sue for the money owed, or sell the account to a collection firm who will continue to pursue the debt.

Tips for Safeguarding Your Credit

Check Your Credit Report Once a Year.
Your can contact Equifax and request a copy of your credit bureau by calling 1-800-465-7166 or by visiting www.equifax.ca. It is your responsibility to ensure that your credit report is accurate. If you find an error report it to Equifax immediately.

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If there is a weakness in the credit reporting system we believe it lies in the failure to follow-up and correct errors on an individual Credit Bureaus. We have, on occasion, encountered situations where Credit Grantors have placed derogatory ratings on individuals credit report. Responsible individuals will act quickly to correct the problem; responsible Credit Grantors will act quickly to make the proper notation that settlement has been made or the account has been paid. To ensure that the proper corrections are made we suggest that you request the credit grantor provide you with a letter to the effect that settlement has been made or the account has been paid along with the date that such settlement/payment was made plus confirmation that Equifax has been instructed accordingly. In the event that Credit Grantor fails to do the required follow-up in a timely manner it may be necessary to contact a Paralegal or Lawyer to force the issue.

The importance of ensuring corrections to your credit bureau cannot be over emphasized. Failure to do so prolongs "Dented" credit.

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Stay Informed
Carefully read all credit contracts you sign, as they are not all the same. For example, some lenders classify a payment as "late" the day after it is due, while others offr a grace period of up to 30 days. That one policy can make a significant difference on your credit report (and to your Beacon Score)

Set up Automatic Payments
Set up automatic payments through you financial institution (bank or credit union) to ensure you do not lose track. It will be one less thing on your "to do" list.

Pay Down Debt
Your credit balances should not exceed 70-80% of your available limits. If you are using more than that, it is a warning sign to lenders that you are relying too heavily on your credit lines to meet your obligations. Pay down your debt and, if possible, pay for more items up front. Alternatively, if you have equity in your home you may be able to refinance your mortgage and use that money to reduce your other obligations.

Save for a Rainy Day
Set up an automatic deposit into a savings account. It doesn't have to be a lot and with a bit of money put away, you will have a buffer in case of an emergency.