Credit Report 101

Posted in Credit Repair

credit-report-101-v2If you haven’t seen a credit report before, it’s difficult to know what to look for, let alone what the numbers mean. Many Canadians don’t realize the importance of regularly checking your credit report. You’re entitled to receive one free copy of your credit report once each year and we recommend you take advantage of that.

Your credit report will contain personal information such as your name, address, employment history and social insurance number. It will also include banking information and any creditors who report to the CRA and any companies who have requested a copy of your credit report. The latter can only be done if you’ve granted them permission to view your credit report.

Why is it so important to check this information?

You can be a victim of identity theft and never even know it. Your SIN number and all activity related to it will show up on your credit report.  If you notice a discrepancy, contact the appropriate credit bureau and have it corrected.

You have the why check your report, let’s start with the how to read your credit report.

If you don’t know where to get a copy of your credit report, visit our post on How to Check Your Credit Report.

Each creditor that reports to the CRA will have their own line where they report on your payment history. These are called trade lines.

Creditors will report your history with a letter followed by a number. The letters are loan codes and the numbers are payment history codes. Let’s decode them together:

Loan Codes

    • I – Installment loan (repaid over time with a set number of scheduled payments e.g. car loan)
    • O – Open credit (pre-approved loan amount that can be used repeatedly up to a limit, and paid back e.g. line of credit)
    • R – Revolving credit (automatically renewed after debt is paid off e.g. credit cards)
    • C – Sometimes used in place of revolving credit
    • M – Mortgage loan

Payment History Codes

      • 0 – Too new or approved, but not used
      • 1 – Paid within 30 days or as agreed (on time)
      • 2 – Late payment: one month behind
      • 3 – Late payment: two months behind
      • 4 – Late payment: three months behind
      • 5 – Late payment: more than 30 months, but not yet rated “9”
      • 7 – Making payments under a debt plan (could be a consolidation order, orderly payment of debts, consumer proposal or debt management plan)
      • 8 – Repossession
      • 9 – Written off as bad debt, sent to collection or bankruptcy

Your credit report will include your legal name, birth date, and a note about whether or not your social insurance number is on file. It will also include a list of all known addresses, employers, and phone numbers. All of these will be listed starting with your most recent, and ending with the oldest known entry.

Let’s go through a sample report together.

This is a sample of how your credit report from Trans Union will look:credit-report-101-trans-union