(Special) – Now that the holiday festivities are over, Canadians are getting back to reality and will start getting the bills for their spending over Christmas and New Year’s.
While your spending may have given you and your family a great holiday, it also could end up having a negative impact on your credit score.
“As people clear off their holiday bills they may be late with payments,” Julie Kuzmic, director of consumer advocacy with Equifax Canada, said in an interview. “We see there is a cycle where credit scores tend to drop in January, February and March as the holiday bills come in.”
A new study by Equifax, one of the two national credit bureaus in Canada (the other is TransUnion Canada), shows that Canadians still have a lot to learn about what goes into a credit report and the importance of maintaining a good credit rating.
The study found that 25 per cent of Canadians never have checked their credit report.
Millennials are likely to check their credit report more frequently than older Canadians. Sixty per cent of millennials said they checked their credit report in the last year and 39 per cent had checked it within the last month. Canadians 55 to 64 were not so good with 32 per cent admitting they had never checked their credit report.
In the study only 27 per cent of Canadians correctly identified that there are two credit bureaus in Canada. Fifty-four per cent were incorrect in believing that being denied credit will negatively affect their credit score, 29 per cent incorrectly believe checking your credit report will negatively affect your score, while 24 per cent and 23 per cent respectively incorrectly believe the interest rate on your credit cards and loans and a change in your salary can negatively impact your credit score.
The good news is that at least half of Canadians correctly identified the five factors that can positively affect credit scores — paying bills on time, how much you owe on credit cards and other loans, the types of credits and loans you have, opening new credit accounts and the length of time you have been using credit.
The survey found that 37 per cent of Canadians regularly check their credit report to ensure the information is correct. Other reasons for checking their credit status include making a major purchase such as a car, moving into a new home or apartment, a recommendation from someone, it was required when applying for credit or opening a bank account, and for general interest.
Kuzmic says occasionally there can be issues with data reported to the credit bureaus which can result in inaccurate, incomplete or fraudulent information on people’s credit reports.
“We cannot help consumers take corrective measures unless they take the time to review their credit history,” Kuzmic says. “Ongoing credit monitoring can offer some peace of mind as well as show early signs of identity theft.”
There’s a difference between a credit report and your credit score.
A credit report is a summary of your financial reliability — your history of paying debts and other bills. A credit score is the numerical value calculated from information in your credit file that is used by lenders and landlords to assess your “credit risk” at that time.
Generally credit scores range on a scale from 300 to 900. The higher the score the better. A score over 660 would be considered good by most lenders.
Canadians can access their credit reports for free either by going to a local credit bureau office in person or mailing in a form with two pieces of photo identification. There is a small fee to get your report online or to get your credit score.
“It’s important to know your credit scores because lenders use them to assess the risk of someone not paying them back in a timely manner,” Kuzmic says. “A lower credit score often leads to a higher rate of interest on the money being lent to you.”
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.
Copyright 2019 Talbot Boggs
Talbot Boggs , The Canadian Press
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