If you’re a Canadian, you’re eligible for a free annual credit report from Equifax Canada and TransUnion – free of charge. You can request a free credit report by mail – and you should do so every year, to ensure that your credit report is accurate and updated.
Why? Because your credit report may often have mistakes or errors – and correcting these errors could boost your credit score significantly. Not sure how to read your annual credit report? We’re here with a quick guide on how to understand your credit report – section by section.
Section 1 – Personal Information
The first section of the report is also the easiest to understand. It will contain a basic outline of your personal information. This includes your name as well as known aliases, last known address, current address, employment data (if available), date of birth, and more.
You don’t really have to do anything with this data except ensure that it’s accurate. Then, you can move on to the next section.
Section 2 – Public Record Information
If you have any open legal cases related to your finances, this is where they will be listed and included in your credit report. In general, any legal problem related to your credit can be listed here.
This includes things like bankruptcies, liens, foreclosures, judgments against you by a court of law, wage garnishments, and even auto repossession, in some cases. If you have not had any financial issues that went to the courts, you likely will not have much information in this section.
Section 3 – Creditor Information
This is where the bulk of your credit report comes from. Section 3 will outline all of your creditor information – meaning all of your open, closed, inactive, and charged-off accounts, as well as accounts that are past due and have been sent to collections. Your accounts are broken into two primary categories:
- Adverse accounts (negative items) – This includes all things related to your credit report which may harm your score. From a single late payment, to the charge-off of an account, and accounts sent to collections agencies.
You should look at these items closely. If there are mistakes or errors, you can dispute them with the credit bureau – and you may be able to get them removed from your credit report.
- Accounts in good standing – You’ll also see information about each of your open accounts which are in good standing. This includes revolving accounts like credit cards, and installment loans like personal loans, home equity loans, auto loans, and student loans, as well as “open” utility accounts like water/power, in some cases.
Take the time to examine your creditor information, and see if there are any errors that may be resolved in your favor. This can have big benefits for your credit score.
Section 4 – Credit Inquiries
This section is fairly self-explanatory. It’s a list of all of the “hard” and “soft” inquiries made on your account.
- Hard inquiries – These are made when a potential creditor, such as an auto loan lender, checks your credit report to see if you are eligible for a loan. Multiple hard inquiries in a short period of time can affect your credit negatively.
- Soft inquiries – These are made when you check your own credit report, or when you’re “pre-approved” for a line of credit, and they typically do not affect your credit score.
When shopping around for a loan, try to limit the amount of “hard inquiries” made on your account.
Understand Your Credit Report – And How It Affects Auto Loan Rates!
If you understand your credit, you’ll be in a much better bargaining position when it comes to applying for a loan such as a car loan. So take the time to read and understand your credit report, and dispute any false information.
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