Understanding Your Credit Report
Poor credit habits often translate into low credit scores. Low scores make life more expensive than it needs to be. Understanding your credit report is the first step to seeing where the problems are and key to making some straight forward changes that will raise your credit score. First, we need to understand what is included on your report.
Information Included on Your Report
All of your personally identifying information which includes your full name, date of birth, current and previous address/phone number/employer, SIN, Drivers license info and passport number. You will find all of your credit history including:
- Inquiries from lenders and others that request your credit report over the past 3 years.
- Credit that you use which includes credit cards, store cards, loans and lines of credit.
- Credit related court judgments or bankruptcy.
- Debts sent to third party collection agencies.
- Registered items that include liens on a car that allows the lender to seize it if you fail to make the payments according to the terms of the agreement.
- NSFs – any payments that you make that ‘bounce’ as a result of not having enough cash to honour them.
- Bank accounts closed by the bank for misuse. Misuse includes fraudulent transactions or money owing.
- Notes regarding fraud alerts, identity verification alerts and consumer statements.
Finally, it also includes factual information on your credit, namely, when you opened your accounts, how much you owe, if you make your payments on time or miss payments and if you are over your credit limit.
Second, we need to understand how your payment history is reported and recorded on your file.
The Codes On Your Credit Report
Creditors assign a code made of one letter and one number. Letters indicate the type of credit and numbers show payment history.
I – Installment credit. You borrow money for a specific period of time and you make payments on a fixed date for a fixed amount until the loan is paid in full. An example of installment credit is a car loan.
O – Open credit. Such as a line of credit, where you borrow money, as needed, up to a certain limit and the total balance is due at the end of each period.
R – Revolving credit. You borrow money up to a predetermined limit on an ongoing basis. You make payments on a fixed date in varying amounts based on the balance of your account. Credit cards are an example of revolving credit.
M – Mortgage.
0 – Too new to rate or approved but not yet used.
1 – Paid within 30 days of billing or payments made as agreed.
2 – Payment late: 31 to 59 days late.
3 – Payment late: 60 to 89 days late.
4 – Payment late: 90 to 119 days late.
5 – Payment late: 120 days late.
6 – Code not in use.
7 – Making regular payments using debt management options:
- consumer proposal
- consolidation order
- orderly payment of debts
- debt management program through a credit counseling agency
8 – Repossession.
9 – Written off as a “bad debt”, sent to a collection agency or bankruptcy.
Understanding your credit report means you know how your creditors report your payments. Your payment history is worth 35% of your credit score. Contact a creditor and inquire about moving a payment date. It certainly can’t hurt.
At PYLO Finance Inc., we believe that knowing how your credit works is key to making better financial decisions. Our team is available if you ever have questions.