Have you ever wondered what lenders see when they look at your credit file?
What can be reported about you anyway?.....divorces?.....race or ethnic
information?.....criminal charges?..... drinking habits?.....political
affiliations? What exactly are the limits of credit reporting.
Lenders, or companies who are in the business of lending money, are very
interested in knowing just how you have repaid loans in the past. Did you always
pay on time.....or were you well meaning but always late?
A credit record is your financial resume, giving the lender up to date
information which may affect your ability to repay a loan or mortgage. Sometimes
credit checks are a part of screening new employees, especially if they will be
handling money or valuable goods. A credit check is a snapshot of how you handle
financial responsibilities and commitments.
When you apply for credit, lenders have you complete a written consent, or
are required to notify you in writing that they will be getting your credit
report. The credit agency or bureau's responsibility is to ensure that the
request for a report is legitimate. For instance, your neighbour can not phone
up and find out all about your personal finances. In fact, before many provinces
adopted consumer legislation providing for legal access to consumer's credit
records, you couldn't even see your own credit file. Can you imagine the
problems experienced by people with common names like Joe Brown or Sally Smith?
What if there was negative or untrue information on the credit file?
The provincial ministries responsible for consumer protection developed
credit information reporting acts and standards in consultation with industry.
These standards and statutes were adopted across Canada in the 1970s and 1980s.
You are now legally entitled to view your credit file, and make changes where
the information is untrue. You can provide written explanations of transactions
which are under dispute (300 words or so). These explanations and changes will
be part of your report when a credit report is requested by a lender.
So what exactly can credit bureaus report? A credit report will contain
information about your loans, credit cards, rental information in some cases,
and how you repaid these credit transactions. They can also report any court
judgements against you, and report information which is less than six years old.
For example, if you completed bankruptcy proceedings eight years ago, and were
fully discharged, the bankruptcy would not be reported. A second or third
bankruptcy has a longer reporting period.
 REPORTING NO NO's
Your political affiliations, race, colour, religion, and information about
criminal charges which did not result in conviction cannot be reported. That
also goes for negative information more than six years old (the statute of
limitations). If you find incorrect information in your credit file, ask that it
be removed, and be prepared to demonstrate that the information is wrong.
 DIVORCE/PALIMONY/SHARED FINANCES
This section could be a book, since there are so many variations about how
people end up with debts and credit rating problems when a relationship ends.
Love, honour, and co-sign, that's the vow with a financial kick to it. If you
are experiencing problems, you probably should sit down with a financial/debt
counsellor. Work out a plan for loan repayments, and rebuilding your credit
rating. Don't leave it to chance. It takes hard work, and a plan to get back on
your feet. Is there a credit counselling agency listed in the phone book? Check
the government program listings in case your province has a debt counselling
program.
The rule of thumb about co-signing is that if you wouldn't be prepared to
repay the loan if the the individual you are co-signing for was not able to make
the payments, then you should reconsider providing the security. Co-signing is a
legal commitment to repay the debt should the primary borrower default.
Sometimes you might be better off to put the loan in your own name, so that the
goods being purchased are in your name until the loan is repaid.
Remember, the credit record which is kept on you is your history of
financial responsibility. If you want to buy a house, a car, get a credit card,
or make any other big ticket purchase, a credit check will probably be done on
you. Take responsibility for your finances and take the opportunity to find out
what is in your credit record.
 Article by Marg Spina
|
