As I mentioned in my last post, I had a discussion with a friend last week about her credit situation. What she told me about her credit score and her overall concerns about her credit situation really got me thinking about my own. As much as I’ve been thinking about the finances of my family lately, I realized that I hadn’t taken that step to request a credit report and/or score yet. My friend told me that this was a real wake-up call for her when she was going through the process.
I took a look at some information another writer on this site discussed about how to access your credit score and what it means. I always thought that my age or my employment history had a major impact on if I’d be approved for a loan or not. However, from what I’ve read it didn’t seem to matter – it’s more about ones behaviour with money.
How I got my credit report
Since my curiosity had gone to an all-time high by this stage, I decided that I needed to know some of this information fast. As the blog post above notes, there are 3 main credit bureaus in Canada – Experian, Equifax and Transunion. If I’m honest, I’ve only really heard about Equifax before so it was good to know that there were 2 other firms that could be holding information on my payment history and be reporting this to potential lenders.
After visiting all of these sites, it was clear that they all wanted me to subscribe to get monthly update so on my credit score. Since I realize that my score only gets reassessed on a 6-month basis, I didn’t think that was quite necessary. So, I wasn’t keen on agreeing to that but I WAS interested in finding out information quickly if possible. I also learned from reviewing the sites and a few blog posts, which all Canadians are entitled to receive a free credit report that lists all of the information the relevant bureau holds on an individual’s credit history. This doesn’t include a score but it will list all the firms I have a credit arrangement with, what I owe and my payment behaviour. Additionally it will note any inquiries that were made on my file. An inquiry will happen when I apply for a credit card, loan or even sometimes a bank account. This allows me to see how my behaviour looks and also will help me spot if anyone has been requesting in my name – a proactive step to protect against identity fraud. To get a free report, you need to provide 2 pieces of ID and complete a fairly basic application. This gets sent to the bureau and then they send you a report in the mail.
Although this was free, part of me wanted to know information now and I really wanted to know my credit score. The score is what typically gets reported to companies that will approve a loan. They are grouped into categories such as poor, fair, good, very good and excellent. To get a score, you need to pay so I decided to do it – but only with one company. My plan was to pay for a one-off report and then request two free reports from the other two firms just to check that everything was OK. Since I’ve heard of Equifax before and remembered that a few of the credit cards I’ve applied for went through Equifax, I made the choice to get the detailed report there. Equifax offers an online report that you can access for up to 30 days and provides your score, credit report and discusses what this means to lenders. The cost for me was about $24.00 – which I thought was fairly reasonable – and you have the ability to print out the report or save it to your computer.
So what did I find out?
To go through the verification process online you need some basic information once Equifax recognizes your file. It will ask you some questions about the credit arrangements you have and I found that there were quite a few “trick” questions. For instance, it provided information about a credit card I got recently and asked for the lending institution. However, none of the options were correct so I had to select “none of the above”. I felt good about this process as it made me feel a lot more at ease that someone else couldn’t just access my information. Obviously these questions are randomly generated so it is much harder for someone to crack into it – goodness, I even had a hard time remembering the right answer in some instances.
Once I loaded everything, the result amazed me. My expectation coming out of the credit check was that I’d be in the very good or even excellent category. Surprisingly, my score was only 610. In Canada, a score of 610 is good but just barely. If I was over 750 I would be considered at the very good / excellent range. In my heart I was a bit disappointed.
What this tells me
After feeling a bit sorry for myself, I dug a bit deeper into my score and the commentary provided. It noted in the commentary that I would be considered as moderate risk and that some lenders may use that to offer me a higher percentage on any loans but also may be hesitant to offer me credit at all. I was surprised as I never had that response before. Since my husband and I are both working and we pay off our bills on time (well, most of the time) I thought we were in good shape.
I also delved deeper into the report and noticed a few interesting things. I didn’t realize that taking a long time to pay off debts was a major issue or could lower my score. I wasn’t certain but I could see that being an issue. Although I graduated quite a long time ago, I’m still paying off a little bit of my student loan. I was always told that student loans didn’t really matter and not to worry too much about them. I always do my monthly payment (never missed one) but I haven’t worried too much about it as the interest is so low. It seemed to work against me on the report for some reason as it is showing up as a long-standing debt.
Also, I noticed a couple of inquiries onto my account by banks I didn’t even remember. That not only surprised me but worried me too. I’m going to lodge a dispute with Equifax and ask for more details. I’m not sure if it’s an error on the bank or Equifax’s part but I want that resolved ASAP. I’ve heard that too many inquiries can lower your score so I’d like to address that so it’s wiped off my slate if it wasn’t me.
The last thing I found interesting is the tips provided by Equifax to improve the score. Although I’m still in a “good” position, I know that I can do better. It noted to watch out for any missed or late payments. So, I’m going to go back and look at all my deadlines to ensure that I get them in on time. This is avoidable and I just need to be more diligent.
Now, I’m off to complete my forms for Transunion and Experian. Even though I’m hoping the report will show much of the same, it will be good to just double check this to see there aren’t any other random inquiries out there.
A real eye-opener
Sylvia was definitely right! Getting my credit score and report has helped me know exactly where I am right now. As I’ve mentioned before, the only way to get your finances in order is to know where you’re starting from. Now that I know, the only way is up!!