Your Credit Report: Why You Should Get It and How

A look at the importance of obtaining a personal credit report for Canadians. 

Something I have been thinking about doing but have not up until recently is ordering my credit report. My excuses to date have been that its too expensive and I don't think I really need it so why should I bother wasting my money on it? I was wrong.

What Is A Credit Report?

According to the government of Canada's website, a credit report is a detailed report of your credit history and is kept by at least one of Canada's credit-reporting agencies. In Canada there are two credit-reporting agencies, EquifaxCanada and Trans-Union Canada. Your credit report and score are used by creditors to determine whether you are safe enough to lend money to. There are differences between the two credit-reporting agencies which are worth a more in depth look later. But briefly, your information will be different for each agency as they have different policies for how long they keep something on your file (generally Equifax keeps them on file for less time than Trans-union, but it depends on what it is) and how they rate you. Also some creditors will use your report from both, while others only the one. So I would say that it is a good idea to get your credit report from each. Maybe from both the first time you do it and then alternate every year after that, or be really prudent and do both each year.

Ordering Your Credit Report For Free

Did you know that you can order your credit report for free in Canada. What, free? I didn't see that! Of course not, the credit-reporting agencies want to make money off of you so they charge you for instant access to your credit report online. However, they cannot charge you to mail it in. Go onto their websites and download the form, fill it out and attach photocopies of proof of identity. To order from Equifax click here. To order from TransUnion click here. Mail it in and voila-in a couple of weeks you will have your credit report. Now this is not the same as a credit score, that you still have to pay for. For Equifax it costs $11.95. However, this might not really be worth doing since the score they provide you with is not a FICO score which seems to be the one most commonly used by Canadian creditors. Currently only Trans-union provides you with your FICO score for the low low cost of $22.90.

Why Should I Order My Credit Report?

It's very important to get your credit checked every year (yes each and every single year) because its important to keep a close watch on any use of your name and credit. This is a great way to protect yourself against identity fraud. A good friend of mine told me this story awhile ago about a cousin of hers that was trying to get a mortgage to buy a house. She had the house picked out, but on the day she went to get the loan and put down a down payment she found out that months ago someone had opened up a credit card in her name and racked up several thousands of dollars in debt. While the situation was eventually resolved it took a lot of work on the cousin's part to prove it was not her who opened the card and the time it took meant she did not get the house. Had she checked her credit before going to look for a house she would have seen this big check against her name and dealt with it immediately.

Sometimes there can be checks against your credit that you are not even aware of but have nothing to do with your identity being stolen. Another friend of mine closed a credit card years ago, but didn't realize she owed $0.75 in interest that was eventually reversed. For years that $0.75 was counting against her and she wan't even aware of it.

So get your credit checked every year because its a good idea to have the best credit you can- you never know when you're going to need it. Find out, when you don't need credit, that something is causing your score to go down and allow yourself time for it to recover. Don't get caught surprised when you're applying for a mortgage or line of credit and get denied.