Credit Counseling with
the Sudbury Community Service Centre
Your Credit Rating
Your credit rating represents your reputation in the financial
community, indicating your ability to handle debt. Yet, even though
this information is readily available to others and can affect
everything from buying a car to getting a job, many people have no
clue what their rating is.
What is a credit rating?
"Credit ratings are a big mystery," says Linda Morel, executive
director of the Sudbury Community Service Centre, a nonprofit
organization that helps people with credit problems. "We hold a lot
of workshops and whenever we talk about credit bureaus, hands go up
and people start asking questions. It's not well understood."
Credit bureaus are private institutions (governed by provincial
laws) that compile your credit history from public records, banks,
retailers and lenders, and then sell this information to their
clients. The bureau judges your credit-worthiness and assigns you a
rating, based on a nine-point scale.
How does my rating affect my life?
Missed payments, frequent requests for additional credit and
insufficient or outdated information can result in a bad credit
rating.
A poor rating can prevent you from renting an apartment, financing a
new car, qualifying for insurance, landing a job or obtaining a
loan. Landlords, credit grantors, insurance agents and employers can
access your credit rating and analyze your previous payment patterns
to determine your financial character.
Why should I check my rating?
According to the Canadian Banker's Association, you should check
your credit record if you are unsure of your rating, have been
denied a loan or are about to apply for a substantial amount of
credit, such as a mortgage.
"I recommend checking your rating once a year," says Linda Morel,
“the number of occurrences in identity fraud and false credit card
purchases in on the rise.”
By obtaining your credit record, you will be able to track your
payments, ensure there are no inaccuracies, obtain a list of people
who have inquired about your rating and protect yourself against
identity theft.
"Even people who are not financially active should check their
rating regularly," warns Ms. Morel. "Identity theft has become a big
problem over the past few years, and non-active credit seekers, like
retired people, are prime targets."
How do I get my rating?
As a consumer, you have the right to know your credit rating. You
can get a free copy of your report by sending a written request with
copies of two pieces of identification to the major credit bureaus
in Canada: Equifax Canada Inc. and Trans Union. Ms. Morel suggests
writing to both bureaus. "Even though they carry similar
information, it may come from different sources."
How do I rebuild my rating?
If your poor credit rating is due to an error, contact the credit
bureau immediately. "If someone disputes their rating, the onus is
then on the credit reporting company to investigate it," says Ms.
Morel. The information you are challenging may be removed from your
record, or the bureau may attach a note that indicates your
information is "in dispute."
According to Ms. Morel, you also have the right to place a 100-word
statement explaining your poor credit rating on your file, to be
given to anyone obtaining your report in the future.
Be wary of companies that promise a quick fix for a fee. "No one can
erase bad credit," says Ms. Morel. Though your rating can fluctuate,
any history of delinquency (a rating of R2 or higher) remains on
your record for six or seven years, depending on your province.
If you require further assistance, there are numerous government
agencies and nonprofit organization available to help you change
your unhealthy credit habits. Says Ms. Morel: "Why pay someone when
you can get counselling for free?"
For more information contact the Sudbury Community Service Centre at
(705) 560-0430 or 1-800-685-1521.
