Credit Reporting 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'sYour 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 FINANCESThis 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
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