Using credit wisely is critical to building a solid credit history. Important? Absolutely! Your credit history is what banks and other creditors use to assess how risky it could be to lend you money — and how much interest to charge you. Considering the current economy and subsequent credit crunch, it is not only helpful, but crucial that you find out exactly what information is on your credit report.

In Canada, your credit history is tracked by two major credit tracking companies: Equifax Canada Inc. (www.equifax.ca) and TransUnion of Canada (www.transunion.ca). They keep close records of where you work, the loans you have, what credit cards you use, and if you have ever filed for bankruptcy.

Have you ever missed, or were simply late, making a credit card payment. Have you ever maxed out your line of credit? Was a long forgotten bill sent to collections? Has a family member, roommate, ex-spouse, or identify thief left you on the hook for something? All of these things can seriously affect your “credit score”.  Your credit score is a numeric snapshot of your credit risk at a particular point in time. The score is a three-digit number that lenders use to help them make decisions about whether or not to lend you money. A credit score of 700 or above is considered a good rating.

A company or individual needs your consent and a legitimate business reason to obtain a copy of your credit report. You can also request a copy of the information. There are various on-line reports available for a fee. You can also request a free copy by mailing an application to TransUnion or Equifax (see their websites for more details). If the information on your credit report is not accurate or up to date, immediately contact the credit reporting agencies to correct the information.

Ways to Improve Your Credit Rating

• Pay all of your bills on time. Paying late, or having your account sent to a collection agency will reflect negatively on your credit score

• Try not to run your balances up to your credit limit. Keeping your account balances below 75% of your available credit will also help your score.

• Avoid applying for credit unless you really need it. Too many inquiries in a short period of time might indicate that you are experiencing financial challenges

• Contact the credit agencies if you see anything on your credit report that is inaccurate.

If you are struggling with debts or credit problems, not-for-profit agencies are a good place to seek help. If you want to take more control of your debt, or improve your credit rating, you can also check out courses like “Debt-Free Challenge“, offered through the Women’s Financial Learning Centre.  Remember that you have a right to check on your credit rating. Above all, remember that if you have debt or credit problems you don’t have to struggle alone – help is available. – Karin Mizgala

Karin Mizgala is a Vancouver-based fee-for-service financial planner with an MBA and a degree in psychology. She’s the co-founder of the Women’s Financial Learning Centre.