1. TIPS FOR UNDERSTANDING
YOUR CREDIT SCORE & REPORT

2.  It’s no secret that your credit score and credit report
are often the determining factors for you getting a loan
or some other form of credit. And while many people
just prefer to adopt the “it is what it is” approach,
learning how to understand each one is never a bad
idea.
 That’s not to say you can alter the results just because
you know what they mean, but knowing will give you a
more thorough understanding of your situation, which
is always a good thing.

3. Your Credit History
 Your credit report all begins with your credit history.
Everyone starts out with no credit history, but over
time we all build one. Anytime you take out a loan or
use a credit card, you will have a credit history.
 Whenever a business that gave you credit sends
information about whether or not you made your
payments to a credit bureau, your credit history is
created and added to.
 If you have a history of making payments on money
you borrowed late, it will reflect in your credit history
and you may have trouble borrowing in the future.
 Basically, businesses check your credit history to gauge
whether or not you are a risk to lend money to. A
credit history isn’t a foolproof way to tell but it can give
a pretty good idea.
 When a credit bureau translates information about
you to another lender, landlord or someone else, they
send it in a credit report and a credit score.

4. The Credit Report
 In Canada, there are two major credit-reporting agencies. One is called
Equifax and one is called Trans Union. Your credit history will be recorded in
files that are kept and maintained by at least one of these agencies, along with
the histories of millions of other Canadians.
 Your credit report refers to a picture or snapshot of your credit history, and it is
one of the primary tools that lenders use when they decide if they’ll give you
credit or not.
 Your credit report includes information that details your past and present
financial information. It also contains identifying information like your full
name, social insurance number, phone number, date of birth and employer.
 The only person that’s allowed to see your credit report is you, unless you give
permission for someone else to see it. Usually, when you’re signing loan papers
you give permission for the lender to take a look at your credit report.

5. The Credit Score
 Your credit score is a number that shows
what kind of risk you might be for lenders
when compared to other consumers.
 There are several different ways to work out
a credit score, although the two agencies
mentioned above use a scale that’s
numbered from 300 to 900.
 The higher your score is, the lower the risk
you are for the lender. Most lenders will
already decide on a ‘lowest score’ before
they even find out your score.
 This refers to the lowest score they will
accept to still lend you money. Some
lenders will also use your credit score to
fiddle around with the interest rate you
have to pay.

6. The Credit Score
 Your credit score is determined by using a mathematical
formula.
 This formula utilizes some of the information found in your
credit report, such as your payment history, whether you carry
over balances, if you have ever had a collection agency after you
or if you’ve ever been bankrupt.
 There are many different elements that are thrown into
consideration, but the three most important are:
 Your payment history
 If you’ve been bankrupt
 Amount of outstanding credit balances

7. The Debt-Free Plan
 The ultimate goal of anyone in terms of finances is
to get debt-free and remain debt-free.
 For some people, that’s more of a journey than a
short trip, but it’s still possible for most.
 If you’re stuck, credit counselling can provide some
valuable tips and information to pull it all together
and turn things around.
 Credit counselling isn’t magic, and you will have to
actively participate, but it might work like magic
once you get started.
 Setting a realistic budget and living within your
means is the first step to living debt free. If you
can’t spend less than you make, you’ll always find
yourself with financial issues.

8. The Debt-Free Plan
 When you have an impulse to buy something, stand back for a moment
and ask yourself if you really need it.
 If you’ve been saving money for that specific item that’s one thing, but
in most cases you’ll find that you can save the money and be just fine.
 When you get right into your own lifestyle alone or with the help of a
credit counselor, you’ll find areas to save from all facets of life.
 Things like entertainment, travel, eating out and gas money can all be
stretched to help accomplish your goal of having a high credit score and
living debt free.
 Just take the time to make it a priority and accept the help if it’s
available, and you can plan for all your financial goals.