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Your credit rating

She recommends that consumers request a report from both agencies and that every six months you alternate between the two agencies. That way, you can double-check the accuracy of each report because each agency may have different information on file.

Be sure to look for incorrect information, such as any outstanding payments that are not yours, or are yours but you didn't receive a statement for or you forgot to pay.

"Making sure your information is up to date is so critical," says Laurie Campbell, executive director at Credit Canada. If, for example, you're applying for a loan or a mortgage and your credit report shows that you're still at your old job, that can impact you getting a loan.

Creating and maintaining a healthy credit rating
The most common mistake that people make with their credit rating is assuming the more credit cards you have the better. "People think, 'I'll have five credit cards and therefore it will look like I'm more credit worthy,'" says Campbell, "but it actually works against you. [Instead] it tells creditors that you have the ability to get into debt because you have access to all that open credit."

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Campbell offers this checklist of tips for other ways to keep your credit rating healthy:

  • Limit the amount of open credit, whether it's credit cards or lines of credit, to those that you use (you only need one credit card to keep your credit rating in good tact).
  • Make sure you always pay your bills on time, even if it's just the minimum;
  • if not, you're paying interest and if you lag on a regular basis, you'll end up with a sporadic payment history on file.
  • Avoid missing/forgetting a payment date by making a payment ahead of time online, by mail, or in person at your bank.
  • Check your credit rating once a year to make sure it's up to date and accurate.

"I think it's important for people to understand that it takes a long time to improve a bad credit rating, so make sure you're in good shape, rather than trying to fix it after the fact," says Campbell.

For more information on credit reports and scores, visit the FCAC website at itpaystoknow.gc.ca.

Diana Cawfield is an award-winning writer specializing in finance.

-- Posted October 24, 2012
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