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Your credit rating

If you use a credit card and haven't checked your credit rating, it would be wise to know what's on the record. Unbeknownst to many Canadians, credit reports can have a major impact on your life, and misinformation and errors can occur.

Not knowing your credit rating can affect things like your ability to get a job, a car loan, or a mortgage, for example. Your credit report will also show if you have been a victim of fraud. In worse-case scenarios, people who abuse, or are sloppy with credit card payments, can trigger a bad credit rating that can take years to improve.

Bankrate Canada spoke to a federal government agency and a veteran in credit counselling for their best advice on maintaining a healthy credit rating.

Be aware
The first thing that Canadians should know is what triggers the creation of a credit report. According to Julie Hauser, media relations officer with the Financial Consumer Agency of Canada (FCAC), as soon as someone starts borrowing money they create a credit history and a credit rating.

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"Some people don't realize they have a credit rating because they never asked about, or were even aware of it being created," says Hauser. "It's created as soon as you apply for a loan, a credit card, or a mortgage."

In all of those circumstances, a creditor provides your financial information to a credit reporting agency. The agency also tracks how you use credit products, such as credit cards, and how you pay your bills. A credit score is drawn from your credit history and it can affect whether lenders will loan you money and how much interest they will charge you. "So it's important for people to be aware of what's in their credit report to ensure that it's accurate," adds Hauser.

How to check your credit rating
According to a recent survey by the FCAC, 90 per cent of Canadians do not know that they can receive a free credit report by mail, and 62 per cent do not know how to dispute an entry in their credit report.

While the FCAC does not provide personal credit rating information, Canadians can receive a credit report from two private sector agencies, TransUnion of Canada Inc., and Equifax Canada. The credit report is free; however, to get your credit score, which is a calculated scoring number based on your history in handling credit, there is a fee.

"In most cases, you probably don't need to know what your score is," says Hauser, "because in reviewing your credit report, you get enough of an idea of what your score is likely to be."

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-- Posted October 24, 2012
See Also
Expert Advice: Choosing a credit counselling service
Protecting credit during a separation
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