All About Credit Reporting
To start, here is a little bit of information about credit-reporting agencies in Canada. The two largest credit-reporting agencies in Canada are Equifax and TransUnion. These agencies are a repository of consumer credit information. They do not make credit decisions, rate consumers, or grant credit. The agencies receive information about you directly from your credit grantor, which is based solely on that grantor’s experience with you. This information is then compiled by the agency in a credit report that is made available to the “members” of the credit granting agency or you, the debtor.
Check For Errors
It is recommended that you check your credit files at least every two years to ensure that the information is accurate and that there have not been any unauthorized inquiries. If you find that there are inaccuracies or errors, there is a dispute process within the Credit Reporting Agencies and they are required under law to investigate on your behalf and make corrections where necessary.
Don’t Get Scammed
Beware of advertisements or individuals who offer to “fix your credit rating” for a fee – especially if that fee is payable up front. In reality, no one has the power to change or erase accurate information in a consumer’s file. The “repair” to an individuals credit file comes over time with the proper use of credit, and is based on a debtor’s behavior. Those who offer a “quick fix” are trying to take advantage of debtors who are unaware of the credit system and how it works.
Improve Your Rating
The first step is to ensure that the information in your credit report is accurate. After that, the only way to improve your credit report is to use credit wisely. Wise use of credit includes:
- Limit yourself to one or two credit cards.
- Pay your bills on time.
- Be prepared to show stability of employment and residence. Creditors want to know that you have a reliable source of income and that they can easily contact you if necessary.
- Get a secured credit card and pay the balance off every month.
- Keep an emergency store of cash to be used to pay your living expenses if something goes seriously wrong with your income sources.
- Communicate with your creditors. If you run into problems, talk to your creditors and tell them that you intend to pay your bills, but you need a bit of leeway.
- Consider that the alternative, bankruptcy, may well permit you to recover a good credit rating much faster than credit counseling.
If you are having debt problems, a collector or collection agency can contact you on behalf of their client in an attempt to get payments from you. Being behind in your payments does not mean that the lender or its collection agent has the right to harass you under law.
If you are in debt and your credit rating is getting out of hand, consider contacting our office. We offer free, no-obligation consultations and review all possible options with you.