Credit Bureau of Canada
Credit bureau is a private organization which collects all the credit and debts related information on individuals and provide it to creditors looking to extend credit to them.
This includes, mortgages, line of credit, private loans including secured and unsecured and much more.
The term CREDIT is referred to a mutually agreed upon arrangement where money is provided by one party (lender) to another party (borrower) and the borrower does not pay the resources back to the lender in full and create a debt.
The borrower in turn makes an arrangement either to return the resources at later date or pay some interest (%) on top of the borrowed principal amount. The term CREDIT is used anonymously to GRANTING LOANS.
The concept of Credit has been around since olden days. Prior to 1970, nearly 150 regional credit bureaus divided Canada. These bureaus were nothing but groups of merchants who shared information to reduce the risk of giving out bad credits.
These groups slowly evolved and are known as credit bureau of Canada. Majority of the countries has some kind of credit bureau in place.
What are 3 major Credit Bureau of Canada?
- Equifax Canada Inc.
- Trans Union of Canada Inc.
- Northern Credit Bureaus
Despite the fact that our banking system is one of the best in the world, Credit Bureau of Canada’s service standards are nowhere close to International standards.
In USA the Federal Trade Commission regulates the credit bureaus services and perform regular audits to ensure handling and maintaining the data appropriately.
In fact three major U.S. bureaus ended up paying combined $ 2.5 million US dollars to resolve the charges that they had violated the Fair Credit Reporting Act.
On the contrary, Credit Bureau of Canada/ Canadian Credit System think and work differently. Shockingly enough these are private companies and operate under minimal scrutiny.
They are not liable for the accuracy of your files. They can sell your personal details to the customers without confirming the information. Irrespective of the severity of the matter, they respond to consumer complaints on their own terms and leisure.
It does not matter how good or bad the credit system is, it is a symbiotic relationship between lender and borrower. The concept of credit is designed to safe guard the creditors resources against bad credits. However, creditors have to lend money in order to generate revenue. They use complex calculations and check borrower’s credit worthiness.
If you can keep following 3 things in check, I am confident you can maintain your credit worthiness, reestablish your credit and can leverage your credit to own your home, which in turn becomes your stepping stone in creating wealth for you and your family.
Try following things
1: LOWER YOUR DEBTS:
- Reduce your over all debts. Avoid consumer loans
- Make higher payments and try to pay off the borrowed principal
- Cut down your lifestyle expense and pay off the debts as quickly as possible
Higher loans affect your credit score adversely
Did you know 30% of credit score (beacon score) is based upon your outstanding loan?
2: PAY ON TIME AND EVERY TIME:
Make sure you pay the bills on time and every time. The history of late payments and delinquencies affect your credit worthiness adversely.
Did you know 35% of credit score (beacon score) is based upon your payment history?
3: CHECK YOUR OWN CREDIT REPORT:
- Make sure you check your credit report once a year. The best day is your DOB. You can never forget this date and more importantly it is pertinent to you and your financial future
- Detect fraudulent activities and take appropriate measures
- Detect credit discrepancies in advance
Early detection is the key. The earlier you detect the discrepancy with your credit, the faster you can take appropriate measures to eliminate the issue which in turn, keep your credit worthiness intact.
Check out how Mortgage Delivery Guy helped Mark & Lisa from Toronto in reestablishing their credit and got them a mortgage on their first home.
If you are planning a major purchase like your home, investment property or secondary home within next 3 month and would like to learn more about your credit and various available options, schedule your No Cost No Obligation Mortgage Strategy Session. You will be surprised!
Always Remember: Your mortgage rate strictly depends upon what shows up in your credit report along with your credit score / beacon score.