Credit Rating

A credit rating assesses the credit worthiness of an individual, corporation, or even a country. Credit ratings are calculated from financial history and current assets and liabilities. Typically, a credit rating tells a lender or investor the probability of the subject being able to pay back a loan. However, in recent years, credit ratings have also been used to adjust insurance premiums, determine employment eligibility, and establish the amount of a utility or leasing deposit.

A poor credit rating can indicate a high risk of defaulting on a loan, and thus leads to high interest rates or the refusal of a loan by the creditor. Sometimes your credit can be affected by fraudulent activity. Identity thieves can access your personal information, obtain credit in your name and amass debt and even criminal charges in your name. If you suspect that you are a victim you can help protect yourself by adding a fraud alert to your credit file.

A fraud alert is a notice added to your credit file that alerts creditors that you may be a victim of fraud, including identity theft and requires creditors using the file to take certain steps to verify your identity prior to establishing any new credit accounts in your name, issuing a new card on an existing account, or increasing the credit limit on an existing account, if requests for any of these actions are made. The purpose of this notice is for the creditor to confirm that the request is not the result of identity theft. If the creditor cannot verify this, the request should not be satisfied. There are two types of fraud alerts: an initial fraud alert that lasts for 90 days, and an extended fraud alert that lasts for 7 years.

An initial 90 day fraud alert indicates to anyone requesting your credit file that you suspect you are a victim of fraud. When you or someone else attempts to open a credit account in your name, increase the credit limit on an existing account, or obtain a new card on an existing account, the lender should take steps to verify that you have authorized the request. If the creditor cannot verify this, the request should not be satisfied. You may also request one additional free credit file disclosure.

An extended fraud alert is similar to an initial 90 day alert, except that it lasts for 7 years, and to verify your request a creditor must contact you on the telephone number(s) you provide to Equifax when you requested the extended fraud alert. A valid police report showing that you have been a victim of identity theft is required to place an extended fraud alert. Also, you may request two additional free credit file disclosures, and your name is removed from pre-screened offers of credit or insurance for 5 years.

A good way to make sure that you are on the right track in terms of a good credit rating TECU suggests that you view your credit report at least once a year. You can click on the links below for more information about getting a copy of your own credit report.

Check your Credit Rating with Equifax Canada!

Check your Credit Rating with TransUnion Canada!