Credit score vs Credit report
Similar names, but two very different things!
When applying for a loan, you most likely will come across these two terms. Although they resemble each other, these are not synonyms but rather two very distinct documents!
As you might have already read from our previous blog post What is credit?, you credit score is a 3-digit number ranging from 300 to 900 points (in Canada). You get points for actions that demonstrate to your lenders that you can use credit responsibly. On the contrary, you lose points for things that show you have difficulty managing credit. The higher your number, the better! The lower your credit score, the harder it will be to get a loan with decent interest.The main factors used to calculate your credit score are
Use of available credit
Length of credit history
Number of inquiries (lenders pulling your credit)
Types of credit
Where do we find all of these information? Your credit report.
Your credit report is a document containing a multitude of details about you and your financial status, such as:
• Date of birth
• Current and previous addresses
• Current and previous telephone numbers
• Social Insurance Number (SIN)
• Driver’s licence
• Passport number
• Current and previous employers
Credit history information
• Credit accounts and transactions, such as credit cards, retail or store cards, lines of credit and loans
• Telecommunications accounts, such as mobile phone and Internet
• Negative banking information, such as chequing and savings accounts closed “for cause,” due to money owing or fraud committed by the account holder, and bad cheques (also called non-sufficient funds or NSF cheques)
• Public records, such as bankruptcy and legal judgments, and registered items, such as a lien on a car or house that allows the lender to seize it if you do not make payments
• Debts sent to collection agencies
• Inquiries from lenders and others who request your credit report
• Remarks including consumer statements, fraud alerts and identity verification alerts.
Lenders, employers or landlords will usually ask for a credit report when applying for things like a car loan, a new job or a new apartment! These applications might get quite a bit harder when dealing with bad credit. We at Direct2Wheels are able to help our clients with all credit backgrounds including bankruptcy, repossessions, new to the country, divorce and everything in between. We help folks with bad credit move forward with a car loan designed to rebuild credit in a responsible way.