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Question: What is the role of the Credit Bureau?

Answered by Betty Burwell, Home Economist

Answer: Provincial laws govern credit bureaus so rules and regulations vary.

Credit bureaus offer credit history to financial institutions, credit card issuers, retailers and oil companies. Records show the consumer's credit applications, the number of previous loans and conditions of payment. Your record also holds general information regarding age, citizenship, social insurance number plus present and past employment. It also shows information about your paying habits.

According to Consumer Reports (Aug/05) credit scores are used by the lender to determine how much interest you pay on loans, by insurers to calculate premiums, by employers who are hiring, by mortgage lenders, by landlords and by utility companies to have power or gas connected. Because this information is used in so many different ways, it is important that it be correct and up-to-date. If the information isn't accurate, you should challenge it.

How do you obtain a copy of your credit file?

There are three main credit bureaus in Canada - TransUnion, Equifax and Northern Credit Bureaus. Find out where your credit file is located by checking with your bank or the phone book for the nearest credit bureau. Call or write for an appointment to review your file.

An accurate file can save you money on loans, mortgages, insurance, credit card payments, and lost employment opportunities. The system used to calculate credit scores is based on data gleaned from financial institutions and credit card companies. The information includes payment and debt histories. Information is also taken from public records such as bankruptcies, secured loans backed by an asset such as your property, back taxes and liens. The formula used involves several pieces of data, which reveal a final figure forecasting your payment behavior based on mathematical models. It tells lenders which borrowers will likely pay bills on time. The higher your score, the better credit risk you are.