Your credit bureau reports

Genworth Canada seminars cover a variety of timely topics that help our stakeholders improve their businesses and develop working relationships with partners and clients. Earlier this year, Equifax, one of the two major credit-reporting agencies in Canada, (the other is Trans Union) expanded its reporting data. Genworth Canada hosted a seminar designed to review those changes as well as give the attendees an overview of the form of the report as well as tips on how to improve a credit score.

Joseph MacQaurrie, Business Development Manager for Freedom 55 Financial in Halifax, Nova Scotia, recently attended a seminar along with some new hires.

“It was a fantastic session and a great learning experience for all of use that will help us build better relationships with our clients,” he said. “Many of our clients are the younger demographic, and although they know their credit score, they don’t really understand how it gets generated.”

When applying for any type of loan, a lender requests a copy of a client’s credit bureau report, which gives them a picture of how well outstanding debts are being paid.

Here are the factors that go into determining a credit score:

  • Payment history – This accounts for about 35% of the credit score. Carrying balances from month-to-month and missing payments are two factors. Other factors include the number of missed payments – one in eight to 10 months is not bad, and how long ago the payment was missed. Tip: Pay the minimum by the due date.
  • How much is owed – This looks at the total outstanding balance in relationship to the total of all credit limits and accounts for 30% of the credit score. Tip: Pay down debt to at least 30% of the global loan limits.
  • Account history – The length of time credit account has been active accounts for 15% of the score.  The older the credit, the higher the value.
  • Recent inquiries – This accounts for 10% of the score. Too many inquiries can send a message that a client may need money, which has a negative impact on the score. A client ordering his or her own credit report has no impact.
  • Type of credit – This accounts for 10% of the credit score. Credit is either revolving as in credit cards or installment as in car loans. Higher scores are given to people with a blend of credit from various sources.
  • Collection or bankruptcy – This, of course, has a negative impact on the score. Once discharged from bankruptcy or a consumer proposal, clients can rebuild credit.

There are also a few new items in the expanded report, which includes mortgage information and calculates the estimated risk that a client will default on loans in the near future.

The case study presented at the seminar was also helpful, according to MacQuarrie. “We found the tips helpful since it showed us ways we could assist our clients with lower scores improve and how to repair damaged credit for those who need that extra assistance,” he said. “It was also good to learn what to look for so we can point out any discrepancies to our clients”

Since both Equifax and Trans Union deal with millions of pieces of information on a monthly basis, sometimes mistakes can happen, which can result in false credit scores. In most cases, consumers are not aware of the negative information in their reports. Consumers can address errors on their credit report by calling the creditor in question or writing to the credit-reporting bureau.

“With so much emphasis on credit scores, it’s vital that consumers become more aware of what’s being reported in their individual files,” MacQuarrie said. “It’s equally important to know what affects your credit score.”

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