I decided to get copies of my credit reports and my credit scores because my husband and I will soon be applying for a much bigger mortgage.
I’m glad that I did. It was easy, and the reports from TransUnion and Equifax Canada were very positive – despite my massive line of credit debt.
Your credit score is one indicator of your financial health. Lenders use your credit score to determine whether you are a good candidate for a loan and what interest rate they will charge you.
If you keep track of this information, you can make sure it is accurate. It will also ensure that you won’t be surprised if you are turned down for a loan. You may even be able to take steps to improve your credit score.
I’m into my line of credit for more than $20,000 right now. That’s a bit more than half of the total limit – and it’s way too much debt for my liking.
But my credit reports also show the positives: I pay all my bills on time (except for a recent missed payment on a line of credit). I have two credit cards with a total limit of nearly $30,000, but I only use one card and I pay the balance in full each month. My score at Equifax was 847 out of 900, an excellent rating.
“Most lenders would consider you to be very low risk. You may qualify for a variety of loan and credit offers at some of the lowest interest rates available,” the report reads.
My TransUnion score was 794 out of 900, a good rating.
“You have a high credit score and should be able to receive good rates on new credit and loans. Your credit score indicates that you have used credit responsibly and done a good job of managing your debts,” the report says.
But this report also has a section on what could be lowering my score. It notes that my “loan balances are too high in comparison with your loan amounts.” It says that my credit balances should be below 35 per cent of my available credit limits. “If you have balances above 35 to 50 per cent, you could see your credit score start to drop.”
The TransUnion report was much more thorough. I was surprised to see that it included a Sears credit card and a student loan, both of which were paid in full and closed about 10 years ago.
In both cases, I chose at access my credit reports online immediately at a cost of about $25 each. They are viewable online for about one month. Both Equifax and TransUnion offer free credit reports through the mail.
Get one or both on a regular basis, (every year or so), if you can. They offer a crucial snapshot of your financial picture from the perspective of your lenders.
By Madhavi Acharya-Tom Yew
