Your credit score is simply the result of a formula that translates the information contained in your credit report into a three-digit number. Equifax and Trans Union each use different formulas to determine your credit score. However, for both cases, the higher the number the better your credit score. The formulas are generally based on the FICO model, which was developed by Fair, Isaac and Co. The FICO model determines your score based on the following information:
Factors like age, ethnicity, religion, marital status, salary, occupation and employer information are not important in the calculation of your score.
There are two primary credit reporting agencies in Canada: Equifax and Trans Union. Lenders and other institutions provide these credit reporting agencies with information about how you pay your bills and other debts. The credit reporting agencies then compile this payment history and public record information into a credit report. Your credit report will also include:
Your credit report and credit score are a measurement of your past ability to pay back the money you borrowed. Do not use your credit report or credit score as a measurement of your self-worth. We all agree that a good credit rating is important; however, do not lose sight of what your credit report and credit score measure – the past. Use your credit score as motivation to improve your financial future, and remember that the most important things in life are not money and wealth, but family, health, friends and your spirit.
We all know how crucial credit is for our financial future, therefore it is important you know just what your credit score is so there are no surprises. Become an expert of your own credit situation using the credit report request forms below for both Equifax and TransUnion: