What is a credit report?

A credit report is a printout of the records kept by one of Canada’s credit bureaus. There are three primary credit bureaus in Canada: Trans Union, Equifax and Experian. The records retained by each credit bureau are similar, so most lenders only ask for a report from one of the credit bureaus. The one of choice depends on the lender.

Your credit report contains the history of all your credit accounts for the last six years. If you have never borrowed money before and never had a credit card, your credit report won’t reflect anything. It will come up empty. This isn’t a good thing if you are applying for a mortgage!

That’s one reason everyone is encouraged to have a credit cards (Debit cards don’t count). Using a credit card, even if you pay it off every month, establishes a history of consistency in paying off your debts. Taking out an automobile loan and paying it off early is another way to show your fiscal responsibility.

You may wonder how this works. From the moment you open up a credit card account, you begin establishing your credit because the business that issues the credit card reports a summary of your account activities every month to all three credit bureaus. The credit card issuer or lender tells the credit bureaus when you first opened the account, if you are paying on time, if you’ve missed a payment, and if you’ve exceeded your credit limit.

The credit report also tells potential lenders and credit issuers whether your credit accounts are held jointly (someone else is also responsible for paying on the account). Accounts are also broken down by whether they are revolving accounts where the term is open ended, installment accounts where the term is fixed and payments are fixed, or collection accounts.

The reason for collecting this information is to ensure that other lenders have an accurate picture of your ability to handle credit before they extend credit to you. Because your credit report contains information about your past and current financial health, it is a barometer of just how risky it is to lend you money.

Certain information is not permitted on your credit report. Anything that reveals your ethnic background, sexual orientation, religion or political leanings should not be present.

Learn more about what is in your credit report.