Important Information on Credit Reports

Cashco Presents Everything You Need To Know About Your Credit Report

The information contained within the credit report essentially represent a consumer's credit "reputation" or “risk factor” based as it is on his or her borrowing and repayment behavior over time and maps that behavior to the future to figure the risk associated with a consumer.

Credit reporting companies give businesses insight into a consumer's past and current credit behavior, similar to the ways in which an insurance company might use a driving record or a prospective employer might use a college transcript. These insights, which include a consumer's record of meeting financial obligations, can be used to make decisions about his or her stability and his or her ability and willingness to repay debt.

The Credit Score

There are two credit reporting companies in Canada, providing credit data for businesses. “Equifax” and “Trans Union” each calculate their scores with a unique formula. The two credit reporting entities use similar formulas to create the credit ratings, but will differ slightly in some cases. Regardless of which credit reporting agency you get your report from, it will always include the following sections:

1. Consumer Alert This section will provide information if fraud was ever detected on the file
2. Risk Predictor This section includes your current credit score and a brief summary of what is helping or hurting your credit report
3. Identification This section includes your personal information such as name, date of birth, SIN number (with the first 6 numbers hidden for your protection), addresses where you have lived prior, etc.
4. Inquiries This section shows all of the inquiries that have been made on your credit from companies and entities which offer credit. This could be anything from a credit card company to a tenancy credit check. This will include foreign Inquiries as well, for example if you applied for any kind of credit in the U.S
5. Employment This section will keep a brief record of your most recent employers
6. Public Records This section will include the public records on your file such as Bankruptcies, judgments etc.
7. Trade Information In this section you will find information about Trade lines and their current and past standing. Trade lines are included but not limited to: credit cards, cell phones, installment loans (like auto loan, mortgages, personal loans, lines of credit, etc.) and any other credit obligations that you have on file
8. Banking Information This section may show information on which banks you deal with
9. Collections Information This section will show if any of your past due obligations has assigned to a collection agency

5 Factors that Influence Credit Reports and Scores

1. Open Credit Card Utilization This is the percentage of your available credit that you are using at any given time. It can be calculated by taking your total credit balances and dividing that number by your total open credit limits. The resulting percentage is your utilization rate. Regular credit card use and payments of the entire balance each month will greatly boost your credit score. In an ideal situation, lenders like to see credit card utilization under 35%.
2. Percent of On-Time Payments This is simply the percentage of payments you make on time. It's often a heavily weighted factor in calculating a credit score, so just one or two late payments could significantly affect your score. Paying bills on time is one of the best ways to keep up good credit scores.
3. Number of Derogatory Marks This is the sum of accounts that are written-off, currently behind, or are in collections as well as any bankruptcies or foreclosures. Even one derogatory mark on your credit report will drive down your credit score significantly. Derogatory marks follow the seven year rule before being removed from your credit history.
4. Average Age of Open Credit Lines This is the average of all your credit accounts that are open including any credit cards, mortgages, auto loans, student loans and lines of credit. The older the average age, the better lenders can properly assess credit. The average age points to whether you can manage your credit for an extended period of time. So if you have had a credit card for years and years and have kept up with the associated payments, than be sure not to cancel it. If you do end up closing a credit account, please realize that your average age of open accounts will go down in addition to your credit utilization. It is much better to just keep that account open with a balance of zero.
5. Total Hard Credit Inquiries Hard inquiries occur when a financial institution checks your credit to see if you qualify for credit or a loan of any kind. A hard inquiry will generally take place when you apply for an auto loan, credit card, mortgage, personal loan, line of credit among others. Each hard inquiry will take a few points off your credit score. Several hard inquires made over a short period of time can be detrimental to your credit score so try and avoid applying for a few different forms of credit from different lenders within a few weeks or months. When you are in need of additional credit, research and pick one lender to move the process along. For example, it is never a good idea to shop around for approvals for an auto loan because no matter where you go, your approval will be the same because it is based on your credit portfolio and not the dealership you choose.

Why having a high credit score matters

If you damage your credit score even a little bit, it is a process to get back on track – you have to prove outside of the mistakes that have been made that you are able to properly keep up with your credit obligations. Once your credit goes into a higher risk section, you have to then prove to the banks that you’re able to pay credit obligations with interest rates that are assigned to you which are based on your risk factor. You need to do everything that you can do to prove that you are able to manage debt in a responsible way because the longer you are in a higher risk portfolio, the more interest you will be paying.

How to improve the credit score

Now, we understand that life doesn’t always go our way and there have been times that all of us experience financial difficulties, layoffs, being unemployed, having tough time paying our obligations, or simply forget to make a payment on time and finally it comes to a point that we have some late payments on a bill, loan, credit card, etc. Well this definitely damages the credit score but it is not the end of the world. There is always room for improvement. The key here is to build some positive trade lines in our credit report. There are tools that are available to get back on track. A great way to do this is to apply for auto financing at Cashco Financial. Not only will this get you into a newer, reliable vehicle, but it will create a positive trade line and start your path on building a positive relationship with the lenders. Once you start paying on this loan and paying your other credit obligations on time, the lenders see that you’re able to keep these financing obligations and they will eventually reward you with lower interest rates, going down in yearly increments.

Working towards prime credit is extremely important, with prime credit you pay so much less towards interest so you can keep more of that money for either more premium products, or for lower payments, giving you much more freedom in terms of choice, and finances. The longer you wait to get on this path, the more interest you will pay and the further away that freedom of choice will be.

The good news is, at Cashco Financial, we’ve designed this program in a way to be able to get you into a reliable vehicle with warranty, one that you can count on, while getting you on the path to rebuilding your credit and establishing a relationship with the lenders.

In some cases, we may not be able to secure an approval, this might be for a number of reasons, some of the top reasons a lender won’t approve an application are as follows: recent vehicle repossessions, recent written off credit accounts, recent collections, accounts that are currently behind, insufficient income, insufficient job stability, etc. In these cases where you cannot get approved, we will be able to provide you with a detailed roadmap on how to get on track to be able to get an approval; this is only a 1-3 month process in most cases.

So, give us a call at 1-855-914-7940 or apply online and we will work at length to do everything in our power to help your situation and help you get back on track. We are here to provide relief for today and hope for tomorrow. We want our guests to get back on the path to prime credit and large healthy credit scores.