Resources
Understanding credit ratings
A credit score is a rating determined by a credit bureau based on our repayment habits. It's a tool used to determine the level of risk we represent for lenders (in comparison with other consumers). It's really quite simple: the more we pay our debts on time, the better our credit rating. In Canada, the main credit-reporting agencies are Equifax and TransUnion.
Is my credit rating important?
Yes, it's very important. If you have a good credit rating, it means you have a good financial reputation. With a good credit rating, lending institutions will have more confidence in your ability to repay a loan. This increases your chances of obtaining a loan - which is useful when you need to borrow large sums to buy a car or a house, for example.
On the other hand, it's much harder to find a lender willing to give you a loan when you have a poor credit rating. This can also be detrimental in other situations, such as trying to rent an apartment.
Who can access my credit file?
- A financial institution, before granting you a loan
- A business, before selling you an item on credit
- Before renting an apartment
- An employer, before hiring you
- You, in order to verify the information contained in the report
What information is accessible in my credit file?
- Your name, address and date of birth
- Work experience (name of employer, job title, length of employment, income)
- Your credit situation: late payments, overdue payments, debt repayment history, available credit
- Information on your public financial transactions (unpaid taxes, bankruptcies, judgments against you)
- A list of organizations or individuals who have requested information about your credit
How long is this information kept on my credit file?
For 6 to 7 years
North American credit rating standards
R1 and R9 credit ratings
The most common credit ratings are "R" ratings. These are known as North American standard account ratings and are the most widely used. The "R" refers to "revolving credit", indicating that the rating applies to revolving credit such as credit cards.
The best rating you can get is R1. Conversely, the worst rating is R9. Other rating indicators may appear on your file, such as the "I" rating for debts payable in installments, e.g. car loans, or the "O" rating referring to an open line of credit.
Credit score
The Equifax and TransUnion credit bureaus use a scale from 300 to 900. On this scale, higher scores are better. The higher your score, the lower the risk for the lender.
You can obtain your credit report free of charge fromEquifax or TransUnion.
Still have questions about how your debt affects your credit rating? Don't hesitate to contact Groupe Serpone. Our team will answer all your questions and propose creative solutions to help you regain your financial equilibrium.
