Your credit report is a record of your credit history. It contains information about your debts, including the type and amount of credit and whether payments are made on time.
Credit checks are required by many Canadian financial institutions, landlords and other parties to secure a loan, lease or other service.
The credit rating or score assigned to you by credit reporting bureaus shows how well you meet their criteria for borrowing responsibly. A high credit score allows you to:
A credit file is created for you the first time you borrow money. Young people and newcomers without a credit record should start building one now, because future creditors will need proof that you repay your debts.
A credit card1 is a good place to start. Learn about our different Mastercard® credit cards to find the right one for you.
How do you prove you can be trusted to pay back creditors? Stay within your budget, limit yourself to one credit card, make your minimum monthly payments if you can't pay your full balance and always pay your bills on time.
Worried you'll forget? Set up automatic payments and you'll never miss a due date.
Stay on top of your finances by requesting a copy of your credit report on an annual basis or before applying for a loan. Keep an eye out for discrepancies, which may indicate you've been a victim of identity theft or fraud.
Also check for errors. If the information in your file is incorrect or out of date, contact the credit bureau to fix it.
Collections, defaults, bankruptcies and similar situations can affect your credit rating for six years or more.
It takes time and patience to rebuild bad credit, but it's possible if you maintain good habits. However, it's best to address your debts and create a repayment strategy before you end up with a bad rating.