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What do I need to know about my credit history and score?

If you have ever taken out a loan or used a credit card, you have a credit history.

The financial institutions or businesses that gave you credit, may send information about whether or not you made your payments on time to a credit-reporting agency (credit bureau). This information is called your credit history. Based on your credit history, the credit-reporting agency may calculate your credit score (credit rating). A credit report is a snapshot of your credit history and score.

When you want to get credit in the future, the lender may ask a credit-reporting agency for your credit report. Since the lender is taking on a risk, they want to see if you paid back your debts in the past.

There are 2 major credit-reporting agencies in Canada: Equifax and TransUnion.

Why is a good credit history important?

If your credit history is poor, a lender can refuse to give you a loan or make you pay a higher interest rate. You may not be able to get a mortgage to buy a new house, or take out a personal loan. A landlord may refuse to rent you an apartment.

Who can see my credit report?

Your credit report can be reviewed by any company or individual with "legitimate business need," for example, for an apartment rental, employment, or insurance. Usually, when you sign documents such as a loan or a credit card application, you are allowing the organization that is giving you credit to check your credit history. Credit-reporting agencies will only give information from your credit report to someone else when you have given permission, and when the request is related to credit, collection of a debt, rental of a house or an apartment, or an application for employment or insurance.

To better understand how credit reports work, read the Understanding Your Credit Report and Credit Score guide from the Ottawa Community Loan Fund (OCLF).  

Why should I check my credit report?

It is useful and important for you to know what information is being recorded and reported about you, and to ensure that it is accurate and up to date. If you see loans in your credit report that you did not take out, you could be the victim of identity theft. You can get your credit report for free. Find out more in How can I check my credit history and score?

It's a good idea to request a copy of your credit report from both credit-reporting agencies once a year. If you see an error in your report, contact the credit-reporting agency and your financial institution immediately. You can also contact the Financial Consumer Agency of Canada for more information and help.

For More Information

• Understanding Credit - How credit cards work and how to use credit wisely. From the Canadian Bankers Association.
• Identity Theft - Information about identify theft and a list of agencies that can help you. From Consumer Protection Ontario.
• Preventing Fraud - Tips and information about protecting yourself against identity fraud and investment scams. From GetSmarterAboutMoney.Ca.
• Check Your Credit Report - Explains how to get a credit report and what is in your credit history. From GetSmarterAboutMoney.Ca.