Financial Consumer Agency of Canada

Financial Consumer Agency of Canada

August 23, 2007 11:55 ET

Fifty Percent of Canadians Unaware of What Factors Affect Their Credit Rating

Only fifteen percent have requested a free copy of their own credit report

OTTAWA, ONTARIO--(Marketwire - Aug. 23, 2007) - A recent study conducted on behalf of the Financial Consumer Agency of Canada (FCAC) revealed that 50 percent of Canadians were unaware of the factors that contribute to an individual's credit rating, and only 15 percent said they had requested a credit report for themselves in the past.

Some of the main factors that can influence a consumer's credit report and credit score include payment history, any collection or bankruptcy recorded against the individual, outstanding debts, account history and the type of credit the person uses. A credit report is a file maintained by a credit reporting agency, based on information supplied by lenders, that paints a picture of a consumer's past and current credit situation, showing how good he or she is at paying back debts and what debt is currently outstanding. A credit score is a numerical rating based on the contents of a credit report, an automated assessment of a consumer's credit worthiness.

"Many Canadians don't realize how important their credit reports and credit scores really are. How good your credit score is can determine whether you are eligible for everything from a credit card to a mortgage," said FCAC Acting Commissioner Jim Callon. "A low credit score can also have a big effect on your day-to-day life by increasing the overall cost of a loan, and even making it more difficult for you to rent an apartment or purchase a cell phone."

FCAC today also launched a new online interactive quiz that provides a fun way for consumers to test their knowledge of credit reports and credit scores. The quiz asks questions about credit reports and credit scores, and then provides answers to help consumers fully understand these products.

The new quiz makes it easy for consumers to test and expand their financial knowledge of credit reports and credit scores, showing them how their credit history can affect them. It is available through FCAC's new consumer portal, moneytools.ca.

"FCAC encourages consumers to shop around for their credit needs, but they should also remember that too many credit applications can have a negative impact on their credit score," said Mr. Callon.

Here are some key tips and facts for consumers to keep in mind about credit reports and credit scores:

- You can obtain your credit report free of charge if you request it by mail. You should check your credit report thoroughly at least once a year and make sure that all the information it contains is correct. If you find an error have it corrected right away since it could have an impact on your credit score and therefore your ability to obtain a credit product.

- Your credit report is also the first place to check for signs of identity theft. If your report lists suspicious credit card accounts or loans, someone may have taken your personal information to obtain these products fraudulently. If you don't verify your report on a yearly basis, you may not realize you have been a victim until you are turned down for a loan.

- Your credit score does not change when you ask for information about your own credit report. However, for a consumer with a limited credit history or with a history of late payments, the number of inquiries made by potential lenders resulting from various credit card applications can affect the credit rating.

- You should order your credit report from all three credit reporting agencies across Canada: Equifax, TransUnion Canada and Northern Credit Bureaus. They do not collect and report identical information, so if you don't request your information from all three you may not be viewing all of your financial history.

- For a fee, you may also want to find out what your credit score is. If you do, make sure you read the information provided to you by the credit reporting agencies about the factors responsible for bringing your score down. If you take their advice into consideration and implement their suggestions, you may be able to improve your score.

For more information, consumers are invited to read FCAC's publication Understanding Your Credit Report and Credit Score. This booklet contains tips on how to establish a positive credit history or improve a negative one. It also provides information on how consumers can obtain a credit report for free by mail, how to understand the coded information it contains, how to have any error that shows up on a report corrected, and how to obtain and understand a credit score.

The Credit Report and Credit Score Quiz complements other useful interactive tools developed by FCAC, all with the purpose of keeping Canadians informed about important financial products and services. Credit Cards and You includes a quiz to help you test your knowledge and learn more about credit cards; the Cost of Banking Guide contains a quiz on bank accounts.

For more useful and interesting ways to expand their financial knowledge, consumers are invited to explore FCAC's Web site at www.fcac.gc.ca, which can also be accessed through the Agency's new consumer Web portal, moneytools.ca. They can also call FCAC toll-free at 1-866-461-3222 (1-866-914-6097 for TTY service) for more information or to order any of FCAC's many publications free of charge.

FCAC ensures compliance with the consumer protection laws and monitors codes of conduct and public commitments that apply to banks and federally incorporated trust, loan and insurance companies. FCAC also provides consumers with accurate, objective information about financial products and services, and informs Canadians of their rights and responsibilities when dealing with federally regulated financial institutions.

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Contact Information

  • Financial Consumer Agency of Canada
    John Kane
    Manager, External Communications
    613-941-8988
    Kane.john@fcac.gc.ca