Understanding Your Credit Report

Your credit report is often a snapshot of your credit history. It is really a file recorded and maintained by credit rating agencies such as Equifax Canada and Trans Union. Your report is created whenever your take a loan or are issued any kind of plastic card from banks, lending institutions, retailers and banks. Among other things, how you repay these loans/cards with one of these institutions is reported regularly towards the credit scoring agencies.
Your Credit Score
Your credit score can be a numerical assessment of the financial health. It's a magic formula to get a lender to gauge the danger involved with lending to you. Generally, Canadian credit rating agencies use a scale of 300-900 where the higher the amount the better. The higher your score the less risk the lenders feel you might be. That having been said, many lenders employ their unique internal scoring systems furthermore in the verifying agencies. These scores play a large role in what interest rate is applied for your loan.
Credit Ratings
When reading your credit file, reporting agencies use various codes to represent the credit you've as well as how well you're paying them. Next to each lender's name you'll find things such as relevant dates, credit limits, current balances, repayment history and type of credit ie. credit card (represented with the letter "R" for revolving credit in which the balance can fluctuate) or installment loan (represented with the letter "I" which are such things as car loans). Less common will be the "O" rating which is often used regarding student education loans which can stop due up to now or sometimes for certain balance-due credit lines.
Here are the primary ratings you will notice on your own report:
R0 Too a new comer to rate
R1 Paid within thirty days of payment deadline or otherwise not over one payment delayed
R2 Paid a lot more than thirty days from payment deadline day, or otherwise over two payments past due
R3 Paid more than 60 days from payment deadline, you aren't over three payments overdue
R4 Paid a lot more than 90 days from payment due date, or four payments overdue.
R5 Account reaches least 6 months overdue, but not yet rated "9" (see below).
R6 No such rating.
R7 Making regular payments by having a special arrangement to the money you owe ie. credit counselling or consumer proposal.
R8 Repossession (voluntary or involuntary return) ie. vehicle loan
R9 Bad debt; written-off account, placed for collection, moved without a new address or bankruptcy.
Depending on the trade line (credit type) the letter "R" can be exchanged with an "O" or "I" as explained above.
As you can see, your credit track record provides lenders with a substantial level of info on your financial situation. It's very crucial that you take care of your credit obligations current. If your good rating slips, several things are affected down the line. Take the time to evaluate the following credit brochure and all the best!