The two Credit Rating Agencies in Canada are TransUnion and Equifax. Unlike America where you can check your score for free, easily, in Canada we have to jump through tons of hoops to see the free report. We have to send in a request with photocopied ID by mail, then confirm a piece of mail, then wait for weeks. And we still don't get to see our credit score. These agencies make megabucks selling our personal information to companies that want to check our credit. We don't see a dime of that. But then we can't even access all of that information for free? Sounds more like a communist bureaucracy than a free market to me.
You have probably heard about the importance of your credit score and credit history, and may have even shrugged it off, but there are a number of reasons to check both. First you need to know what’s a good credit score. Then you know that the better your credit score, the better your chances of being approved for a loan, and the lower the rate. But that’s only half of the equation. Even more important than your actual score is your credit report, or credit history.
Your credit score comes from your credit report, so it’s important to understand that in order to improve your credit score you must first improve your credit history. Think of it this way. Remember when you were in school or college? You received individual scores or grades on assignments and then received a final grade at the end of the year. All of your assignments throughout the course of that semester or year are like items on your credit report. Some received good scores, and some may have been bad scores. But all of those assignments come together to give you a final grade, which is how your credit score is calculated. Remember sleeping through that freshman math midterm that brought your entire grade down by 25%? That’s like missing a payment on your credit card or other loan.
Checking Your Credit Report
There are two good reasons to check your credit report. For one, you simply want to make sure the lenders on your account are reporting information correctly. Mistakes can and do happen. Maybe you’ve sent in all of your auto loan payments in on time but for some reason they are reporting a late or missing payment. That’s a big mistake and could cost you qualification on a future loan, or get you higher interest rates elsewhere. A simple mistake like that could really hurt.
The other reason to check your credit report is to spot identity theft. Identity theft can be a silent crime until it’s too late. A criminal may have obtained your information and opened up a credit card in your name and you’d never know unless you spotted it on your credit report. So checking your report at least once a year is a good way to make sure nothing fishy is showing up. The sooner you can catch a problem, the better. Be sure to check out how to freeze your credit, this is something that anyone who has had identity theft should do right away.
You can get your credit reports for free each year. Just head on over to annualcreditreport.com and use their secure site to verify your information. When you receive your report it may be a little overwhelming at first, but the site will guide you through the data and you’ll see what’s most important. If errors do arise, be sure to contact the creditor right away. If you need to check it more often than once a year I would recommend checking out Credit Karma, I use it a lot.
How Often Should You Check Your Credit Score?
For most of us the best answer to this question is once a year, but that does vary. If you are looking at making some big purchases and using credit than you should check it sooner than later, this will better educate you going forward on what you can expect in a loan. If you ever get denied a credit application you should check your credit score right away to understand why. Also if you ever suspect anything weird is going on with your credit you should check it right away.
Checking Your Credit Score
Since you need a good credit report for a good credit score, once you’ve verified your credit history is in-check you may also want to get your credit score. Knowing what is on your credit report is nice, but without having an estimated score it’s really hard to know where you fall on the scale of good and bad credit.
A FICO credit score ranges from 300 to 850, where the higher the number, the better. And the higher the score, the more likely you will be approved for a loan and ensured the lowest rates. When you know your score you’ll have a pretty good idea of where you fit in the spectrum. For example, scores greater than 720 are considered excellent, and would put you in the best position to obtain the best rates and terms. On the other hand, scores less than 620 are considered poor, and that means you may have trouble getting a loan or may have to pay a few percentage points higher interest. Everything in-between is pretty much average and lending requirements will reflect that.
Another often forgot report you should be checking is your CLUE Report learn more about it here.
If you do need to check your credit today I would recommend checking out Credit Karma here – www.creditkarma.com
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Filed Under: Debt
About the Author: KC Beavers is a semi-retired entrepreneur. The subject of personal finance has always fascinated him. In an effort to not bore those around him with all his love of personal finance as much he has come here to bore all of you instead. Be sure to follow KC on Twitter or Google+.
It is important to keep regular tabs on your credit score. We now know that a good score is insurance for a good rate. And, even if circumstances lead to a lower score for the moment, people can repair them in time.
Great article! It's definitely important to check your credit score/report to watch out for identity theft!