by Tim St Vincent

Before I get into the “why” part of this article, let’s first review what exactly your credit history is.

For the most part, your credit history is everything you have done with respect to credit for the last seven years. In many respects your credit history is more important than your credit score, as your credit history is what determines your credit score. We have two credit bureaus in Canada, TransUnion and Equifax. They are private, for profit organizations that gather your credit history, and then take all of the information that they gather and turn it into your credit score. What type of information can they potentially know about you? Well, potentially they know your name, age, birthdate, where you live, where you work, how much you make, your home, work and cell phone numbers, all your credit cards, your mortgage amount, any lines of credit you have, all your insurance policies, even your gym membership. That is only the start of a very long list.

How do they get this information? Well, you give it to them – for free! Then they repackage it and sell it for a profit. Every time you fill out a credit card application, a job application, a rent form, an application for insurance, a cell phone contract; every time you sign a document where you promise to pay someone something, the odds are pretty good that somewhere on that form, in the fine print, you give the other party permission to run a credit check. When they do that, all the information they gathered on the forms goes up to the credit bureaus.

The scariest thing isn’t that the credit bureaus have all this information about you. The scariest thing is that it can all be wrong! This can have a wide-ranging impact on your life. Your credit score has a lot more to do with you than what rate you get on a mortgage. A poor credit score can get in the way of renting an apartment or even from getting a job. If I had a low credit score, I would not have my current job. When I applied to work for the Credit Counselling Society, I gave them permission to run a credit check on me. Now what if when the credit check was run, the information that came up was wrong? What if it had said that I had a very poor credit history and a very poor credit score? What if someone had made a mistake? The answer is simple; I likely would not have gotten the job. This happens all the time. People don’t realize that a poor credit history and a poor credit score can get in the way of finding a job. They will wonder, “Why didn’t I get that job? I was very well qualified and the interviews went very well,” but they won’t make the connection to their credit. Very few of us would even consider that as a possibility.

The good news is that you have the legal right once a year to access all the information that the two credit bureaus, Equifax and TransUnion, have about you. Then once you have it, you can review it for any potential errors and correct them. This is free and has no impact on your score. Why haven’t you heard about this before? That’s easy: because it is a free service. Nobody makes any money on a free service, so there aren’t any commercials telling you about it. This isn’t your credit score. They can charge you to get your credit score so there are lots of commercials for that.

Keep in mind that in many ways your credit history is more important than your credit score, as it is your credit history that determines your credit score. It is also a great way to see if anyone has stolen your identity or used your credit fraudulently, as your credit history lists all of your debts and payments for the last seven years. For example, if it shows you owe $2000 to a phone company in Halifax, and you have never lived in Halifax, well someone may have stolen your identity. You don’t have to pay someone $20 a month to protect you on line. You can do it once a year for free.

It is very important that when you go to the credit bureaus to get your credit history that you go to both of them. They keep separate files on you. Remember that these are private, for-profit organizations. They are not government organizations. Though the information they track about you is highly similar, it is not identical. They will each have somewhat different information on you. This means you actually have not one, but two credit scores; one with each organization.

Next month I will finish up this article and tell you about some real life errors that the credit bureaus have made, and the real life impacts these mistakes have made – including a mistake that I recently spotted that they made about me. This particular mistake caused my credit score to drop over 140 points. If I were to apply today for my current job with the incorrect score that the credit bureaus are reporting, I likely would not have this job. More on that when you pick up next months’ edition and we answer the question, “Why should I check my credit history?”

Tim St Vincent is a retired CFP and is a Certified Educator in Personal Finance with the Credit Counselling Society, a Non-Profit organization. If you wish to contact Tim for a free workshop or webinar, have a question or would like to submit an article idea please contact Tim at 1-888-527-8999 ext 1330. You can also contact the Credit Counselling Society for further information or assistance at 1-888-527-8999 or visit www.nomoredebts.org or www.mymoneycoach.ca

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