What a credit report reveals, and how to get yours

Until this past year, I’d never seen my credit report, a mysterious document that can dictate whether we are granted a credit card or accepted as an apartment tenant.

Home Depot signed me up for a year of credit monitoring and easy access to my credit reports after they suffered a hacker breach. This was through Equifax, one of Canada’s two major credit bureaus. The other one is TransUnion.

There wasn’t anything that was a surprise on my report, which was a relief. It catalogued my credit cards, an old car loan, the mortgage. In each listing there was a recent balance and an indication of whether I was paying on time. Paying on time is a very big deal. Some of the information lagged by a few months. Some of it was six months out of date: I had cancelled a credit card that was still listed as active.

The report showed that I wasn’t bankrupt and didn’t have any creditors chasing me. It said there were no public records about my financial situation such as court judgements and liens.

It listed inquiries that had been made about my credit worthiness. This is a section that can be an early warning of trouble. If someone is trying to steal your identity or commit fraud, hints of malfeasance might show up here with inquiries that you didn’t authorize.

The most intriguing thing was the credit score, which is a rating of credit worthiness translated into a number based on information in the credit report. I admit to becoming a little obsessed with it. I was miffed when the score went down, and pleased when it went up. The ups and downs happened for no reasons that I could discern. Nothing much changed in my financial life. Yet, the score bounced about within a range of 20 points during the past year. Algorithms at work.

There isn’t much of an explanation for how the credit score is calculated, apart from a notion that it’ll be a higher number if you pay your bills on time, don’t have a lot of debt, and have been credit worthy for a long tiime.

Your credit score is likely to go down a little each time a creditor makes an inquiry. The thinking here is that if there are a lot of inquiries, you might be going on a spending spree, which would make you less credit worthy.

Credit bureaus each have their own credit score systems. Some top out at 800 points. Equifax goes to 900.

Advice from Equifax about keeping your score higher:

“Numerous inquires on our credit file for new credit may cause you to appear risky to lenders, so it is usually better to only seek new credit when you need it.”

And this:

“Usually, it is a good idea to keep your oldest credit account open, as a high average account age generally demonstrates stability to lenders. Also, especially if you have been managing credit for a short time, opening many new accounts will lower your average age and may have a negative impact.”

Here’s how Equifax defines its scores.

300-559 - poor credit worthiness, assigned to 4% of Canadian consumers
560-659 - fair, 10%
660-724 - good, 15%
725-759 - very good, 14%
760-900 - excellent, 57%

Here’s another set of Equifax numbers, showing the delinquency rate within each cluster of credit scores. When you hit 800 or higher, you’re very unlikely to not pay your bills.

300-499 55% delinquency rate*
500-549 33%
550-599 21%
600-649 11%
650-699 5%
700-749 2%
750-799 1%
800+ 1%

You can get your credit report for free by mail by filling in a form and submitting photocopies of ID documents (they want both sides) to prove your identity. I’m a little uncomfortable about sending photocopies of ID documents off to a post office box, but that’s the system.

(A colleague was immediately reluctant to seek his credit report when he heard of the need to mail in copies of his ID documents.)

You can make your request by phone. An automated voice will ask you to key in your social insurance number and other personal information. The credit report will eventually be mailed to your home address. I haven’t tried this.

While the credit report is free, there’s a fee to get your credit score. You’ll be offered a chance to buy the score during the phone call, which you can decline. If you’re doing things entirely by mail, there’s a spot on the form to request your credit score and to provide credit card details to pay the fee.

Equifax phone number: 1-800-465-7166

TransUnion phone number: 1-800-663-9980

There’s immediate access if you do things online, but you have to pay. You fill in an online form with information that proves your identity, including specific numbers from your financial life.

Here’s a credit reports guide from the federal government.

Equifax form and information for requesting a credit report:

The form

Answers to frequent questions

Contact information for getting a free credit report

TransUnion:

Instructions

The form

The fee for credit scores can vary. Equifax, for example, charges $23.95 for an online package that includes the score, your credit report, and explanations about what it all means. It’s cheaper to do it by mail; the credit report is free, the credit score is $11.95.

Here’s a discussion about credit scores from the federal Office of Consumer Affairs]

You can sign up for unlimited access to your credit report and credit score, along with credit monitoring. The monitoring involves things like sending you an alert if there’s an unusual surge of inquiries about you, or if your credit card numbers are found floating around the Internet. There’s a monthly fee. Depending on how big a package of services you sign up for, it’s around $15 to $20.

* This is Equifax’s definition of delinquency rate: “the percentage of borrowers who reach 90 days past due or worse (such as bankruptcy or account charge-off) on any credit account over a two year period.”

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