Your credit score affects all aspects of your financial activities when it comes to borrowing money. It also has the ability to affect the job you get, the apartment you rent, and whether you can open a bank account.

What is a credit score?

Your credit score, or beacon score, is a number that gives mortgage lenders an idea of your lending risk. Credit scores range from 300 to 900 and the higher you score, the better. This can often impact the interest rate that you qualify for and what mortgage products might be available to you.

What is a credit report?

A credit report lists 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 reports the information to these two agencies. Liens, judgments, work history and your home address are also documented. Together, this information makes your credit report.

The information on your credit report varies based on your creditors and what they have reported about you. Potential lenders 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.

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.