People seem to be continually confused by their credit report (aka credit rating), and how it impacts their ability to get credit. This document alone can impact your ability to work at certain companies, rent an apartment, get a credit card, and even open a savings account.

This detailed collection of your entire history of borrowing habits is being used by more and more institutions all the time. Like it or not, many places consider this type of reporting a very good indicator of your character. The report contains details on your payment history, your previous loans, any liens against your property, where you've lived and worked, whether you have been sued, and whether you have declared bankruptcy in the last seven years.

What many people do not know is that you have legal right to be able to gain access to this information. Not just to see where you stand, but also to correct any erroneous reporting that may have occurred. Unfortunately many people have a tendency to discover outstanding issues on their credit report when it is too late (ie. 20 days before the closing). The strange thing is that even though by law people have a right to see what is in their file (and correct erroneous information), they rarely do until it is too late. You should check your credit report at least once every two years to make sure that everything on it is accurate. I don't suggest checking much more often than that, or creditors may wonder what you have to worry about.

In Canada the two main credit reporting agencies are Equifax and Trans Union. Both of these credit reporting agencies have a mechanism in place for consumers to get their own reports. The contact details for these agencies are contained below.

Equifax
Consumer Relations Department
Box 190 Jean Talon Station
Montreal, Quebec
H1S 2Z2
(416) 227-8800, (800) 465-7166

Trans Union
325 Milner
Toronto, ON
M1B 5N1
(416) 609-2070; (800) 663-9980.

It is not unheard of for these two reporting agencies to have different information on you. It is also not unheard of for people to be flagged with credit accounts that they never had. If the credit report you obtain and your financial information are not the same, then the onus is on you to have this corrected. It is critical that any correspondence that you have between the credit reporting agency and yourself is always documented. ALWAYS GET EVERYTHING IN WRITING AND KEEP IT FOR YOUR PERSONAL RECORDS. Unless you have it in writing from the creditor with an issue - consider it unresolved.

Many people are surprised at just how much information is collected. Remember when you didn't pay that dentist that took you to small claims court, how about that last hydro bill you skipped out on after your fourth year of university? Even if you don't remember these items, your credit records will help every one else remember. If you have liens against your name then most lenders will not extend any credit to you. The lawyer's office you use will also do a name check before registering property in your name. This then enables them to dig up further dirt.

Don't find yourself in a last minute panic because you suddenly discovered that Mr. Jones unpaid Visa account has you listed as the guarantor. Take the responsibility for your credit, and monitor your credit like you would your health. Check ups are always a good idea.

On a positive note, bad credit is not something you can't overcome. With time and re-established credit that Sears card that went to collections may not be forgotten, but can for the most part be forgiven. Remember that your credit rating is only one piece of the puzzle in the lending decision. At the same time, it is too important a piece to ignore.

Until next time, best of luck in finding your home and mortgage needs.

_{This Article originally published in "New Homes and Condos - GTA" in the Aug 2, 2004 - Aug 30, 2004 and Mar 28, 2005 - Apr 11, 2005 issue.}

Calum Ross is one of Canada’s top ranked mortgage advisors. He has appeared on Canada AM, Investment Television, Report on Business Television, City TV, is an industry speaker and mortgage columnist. He holds both a B.Comm and MBA in Finance.