This page is designed to help you understand and learn the credit basics and also how to attain and maintain a good credit score. Also, identity fraud/theft is the single most increasing crime in Canada. Your credit report is just that – Your Credit Report – you are responsible for the accuracy of the information reported on the report by the credit reporting agencies in Canada. The Anderson Financial Mortgage Team recommends that you “Protect Yourself” and review your credit report regularly.

The first step is to review your own individual credit bureau. You can contact your local credit bureau for a copy of this usually for a nominal fee.

One thing to note when ordering, there are two types of credit reports that can be requested; with or without your credit score (Beacon Score). The Anderson Financial Mortgage Team recommends that you order the version with your Beacon Score as this “Beacon Score” number plays a major role in the credit granting decision process and can help us to determine if your currently qualify for mortgage financing or if further steps need to be taken to improve your credit.

In Canada there are two major credit bureaus agencies – one being Equifax. Equifax can provide you with a copy of your individual credit report.

Once you have a copy of your credit report there are few things that you should verify…

• Incorrect or wrong mailing address
• Incorrect Social Insurance Number
• Signs of identity theft
• Errors in your credit accounts
• Incorrect late payment history
• Unauthorized “Hard” inquiries

The “Hard” inquiries are done when you are applying for new credit. Every “Hard” inquiry does affect your credit score. “Soft” inquiries are done by existing creditors to update your current information. “Soft” inquires do not affect your Beacon Score.

What is a Beacon Score?

Your “Beacon” score is a predictive credit worthiness score. It forecasts the credit behavior of an individual for the past 2 - 3 years and the Beacon Score typically ranges between 300 to 900.The higher your credit score, the better. In some cases, a mortgage applicant may not have a Beacon Score at all due to numerous reasons such as not having any form of credit open, being a new immigrant to Canada, no re-established credit after a past bankruptcy, etc.

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All mortgage lenders require a mortgage applicant to have a credit “Beacon” score. Mortgage lenders typically look for a minimum Beacon Score of 580 for mortgage financing purposes. For specific types of mortgage financing ( 100% Financing Programs, 95% Refinance Mortgage Program), mortgage lenders along with Default Insurance providers (CMHC – Canada Mortgage & Housing Corporation) have higher minimum Beacon Score requirements (usually 680). If no Beacon Score is available, or if the mortgage applicants’ Beacon Score is below their guideline minimum score, the mortgage application may be subject to tighter scrutiny or higher interest rates/lender fees.

How long do items report on my credit report?

Inquiries remain on your report for three years after the date of inquiry. Your credit information remains for six years from the activity date.

Consumer proposals will remain on your report for 3 years while a first bankruptcy reports for 6 years. Should you be unfortunate enough to declare bankruptcy twice or more, the second and subsequent times will report for 14 years each.

What about credit repair?

• Never pay for these services. There is no such thing in the truest sense.
• Only responsible credit practices over time can improve poor credit history.
• Ensure timely payments of all credit accounts.
• Re-establish credit as soon as possible after being discharged from bankruptcy.
• Obtain “Secured” credit in order to re-establish credit – typically by way of a secured credit card with a recommended minimum of $1500.00.

To better understand your credit report and learn more about Equifax, or obtain a copy of your own credit report, click on the Equifax link.