Know Thy Credit Bureau

Know Thy Credit Bureau

Your credit report is one of the most opaque and important documents in the financial realm. This document can make or break the achievement of your financial goals (like getting approved for a mortgage) and partially determines what interest rates you pay. It’s vital to understand the basics of your credit report in order to gain financial independence.

Essentially, your credit report is a summary of your entire credit history, including personal information, the credit products you have, how much you owe, and if there are any derogatory elements (e.g. collections notices). This credit information is then used to calculate your credit score. Credit scores range from 300 to 900 (0 if you don’t have any credit products, and 900 being the best possible score). Businesses, banks, and organizations use your credit scores to determine if and how they will lend to you. The two credit bureaus in Canada that compile your credit reports and determine your credit scores are Equifax and Transunion.

The following are best practices to optimize your credit score;


1. Your Credit History

The past is the past, but thankfully changes can begin now. Late payments, past collections, bankruptcies and unfortunately, even withheld payments arising from business disputes, can negatively affect your credit bureau. The solution is to try to make sure that payments are made on time and if you have any difficulties, contact your credit issuer before the due date to come to an agreement. Every year you should verify the accuracy of your credit report with BOTH credit bureaus and immediately report any irregularities. You can verify the events of your credit report by ordering your information online. Transunion and Equifax both offer a free credit report and premium options for a fee. The free options can be found here and here.

2. Credit Utilization

Another important effect on your credit bureau is how much of your credit bureau is used. The Financial Consumer Agency of Canada (FCAC) report that you shouldn’t use more that 35% of your total credit limit (all your limits added together). If you utilize too much of your credit then this appears to be derogatory and will negatively affect your credit score. On the other side, if you rarely use your credit products then your credit score will not develop beneficially either.

3. Length of Credit History

Simply, your credit score is greater when you have a credit report that has been active for a long period of time. This also applies to individual credit products because it’s deemed to be more responsible and dependable when you have managed it for a long period of time. It’s a good idea to keep your old credit cards active just for this benefit.

4. Number of Inquiries

The number of credit checks performed also affects your credit bureau. Specifically, these “hard” checks arise from activities like credit card applications, car loans and even rental applications. You can usually ask the credit representative how they will impact your credit bureau. Mortgage and loan applications will often count as just one hard hit if the credit checks are all performed within two weeks.

5. Types of Credit

This is not a very important step, but still causes a minor impact. Your credit score will be greater if you have a mixture of credit products; for example not just five credit cards, but also a loan or line of credit.


Well those are the basics to optimizing your credit report. The credit bureaus do not disclose how your credit score is mathematically generated and the only way to increase your score is to follow best practices. The process to bettering your score can be slow, but you’ll eventually make it there.

As always thanks for reading, and if you have any questions please contact me at or 647-289-0012.

Please sign up for my e-newsletter and I’ll let you know when I write a new blog post or highlight important articles I feel will help you out as you work on getting your finances in order.

Helping you grow,


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