Understanding Your Credit

Understanding Your Credit

Many people get confused when it comes to their credit report. Few people know what information is gather to make up your report and your final score. Your credit report is made up of several parts, but basically it contains information about your past and present personal and financial situation.

Personal information: This is your basic information such as your name, address, (several if you have moved recently) social insurance number, telephone number, date of birth, and your current and previous employer(s) again if you have changed jobs in the last few years.

Credit information: This section is information related to any credit you may already have, like credit cards, store credit cards, a line of credit, a loan or a mortgage, car lease.

Banking information: This is information about the bank or credit union accounts you have, including a record of NSF (non-sufficient funds) or "bad" cheques you may have written.

Public records: A bankruptcy or a credit-related court judgment against you in a lawsuit would be in this section. Loans, where you have pledge an asset as collateral, like a car loan, would also appear in your credit report.

Collection information: This section will show if you ever had a debt that you could not pay which was referred to a collection agency for payment.

Consumer statement: This area allows you to put a statement on your report related to a problem with a creditor. For instance, if you have a dispute with your credit card company and they report you to the credit bureau it allows you to post your side of the story.

Credit report inquiries: This is a list of all of the people who have inquired about your credit: yourself, a lender, or any other authorized organization.

By taking the information from each of the catagories above, a very complicated mathemathical formula is applied to arrive at your credit score. But each of the above is not treated equally in determining your credit rating or as it is commonly called in the industry your Beacon score. Your payment history, outstanding credit balances and if you have been bankrupt are weighted much more heavily than if you personally enquired into your credit score. Credit cards with high limits and high balances affect you more than a high limit with a low balance.

Jamie Woodend
Sales Representative
Remax a-b Realty Ltd Brokerage
88 Wellington Street
Stratford, Ontario, N5A 2L2
519-273-2821 ext 229 Office
519-949-0345 Cell