In the new era of Canadian government trying harder than ever to control Canada’s debt load, I thought a short blurb on credit reports would be appropriate.

As credit has become more and more abundant in our society, your credit report, and thus your credit rating, has become more important in your daily life. Your credit rating affects all aspects of your financial activities when it comes to borrowing money. Your credit rating also has the ability to affect the job you get, the apartment you rent, and even the ability to open a bank account. Your credit report itself is simply a listing of all of your mortgage and consumer debt. Here in Canada, the two main credit reporting agencies are Trans Union and Equifax. Both agencies have a credit history file on anyone who has ever borrowed money. Every time you borrow money, or make a payment on a loan or credit card, the lender then reports the information about the transaction to these two agencies. In addition to credit information, you will also find liens and judgments on your credit report as well as your address and possibly your work history. The accumulation of all of this information is called your credit report.

The information on your credit report varies based on your creditors and what they have reported about you. Potential lenders and others, such as employers, view your credit history as a reflection of your character. Whether we like it or not, our financial habits have a lot to say about the way in which we choose to live our lives. The credit score, or beacon score, is a number which gives mortgage lenders an idea of your lending risk. Credit scores range from 300 to 900, the higher your credit score the less risk one has associated with themselves. The mortgage products and interest rate that you will qualify for are often determined by your credit score.

One thing that many people do not know is that you have the legal right to obtain a copy of your credit report. A mortgage professional can help you obtain a copy of this report and go through it with you to verify that all of the information is true and correct. The good news is that your credit report is a working document. This means that you have the ability over time, to repair any damaged credit and increase your credit score.

I recommend that you keep this bit of information in the back of your mind whenever you purchase something on credit. The Canadian government may be taking additional steps to help to reduce lender risk. Last year they changed the law on the duration of amortization. It was changed from a 40 year to a maximum of 35 year amortization. This reduced the debt load of the borrower by paying more principal than interest, which took more burden off the system of lender funds. The next two steps the government is considering is increasing the down payment requirements and lower the amortization from 35 to 25 years.

Soon it will not be as ease to obtain a mortgage as in the past. Keep your credit score in check!