6 things you won’t find on your credit report and why they’re important
A credit report reveals what has happened in the past and because we are creatures of habit we tend to repeat ourselves
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Q: I hate to admit it, but I fell in love with my girlfriend in the six months since we were dating. She might even be “the only one”. The idea of settling down with her is a little terrifying because she’s gathered her things and I don’t feel like that at all. I don’t want her to find out how hard I had to work to get to where I am today. She grew up with parents looking out for her future, so she hasn’t had it as difficult as I have. We’ve started talking about moving in together and she wants us to show each other our credit reports before committing. I’m pretty sure mine will look awful compared to hers because I almost failed in my business; What can I do? ~ Erik
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A: Money is an important part of our life – the way we earn it, manage it and spend it says a lot about our values. However, talking about it is not something that most people do. What many couples forget is that turning shared and individual financial hopes and dreams into reality will take a lot of compromise and working together. Sharing financial information with a potential future spouse is the start.
I understand your apprehension about showing your financial soul, but keep in mind that your girlfriend may also have flaws that she wants you to be aware of, and this is her way of telling you. I encourage you to keep an open mind. Use the mutual presentation of your credit reports as a way to start a more in-depth conversation about how you’ll manage your money and debt as a couple when the time comes.
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How are credit scores determined?
Credit scores are made up of a number of factors, many of which are determined by what is on your credit report. Our educational website has an extensive credit information section , devoted to explaining what’s on a credit report, how to get your own credit report, what a credit score is, and what lenders look at when you apply for credit.
Rather than repeating that information here, let me walk you through six things that are NOT on your credit report, which might help reassure you a bit:
1. Your income
Your income and your employment details are not shown on your credit report. Many people think that when they apply for a loan, the information they give their lender gets put on their credit report. Some information is flagged, for example, your employer may be listed as part of your personal information, but most of the information you provide to your lender stays with the company they work for. This is why the information on your credit report may be out of date; it is only updated when you apply for new credit.
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2. Information from lenders who break their agreement with a credit bureau company
Lenders enter into a contract with credit reporting agencies to communicate information about their customers, as well as to pay a fee for obtaining information when a new or existing customer requests to borrow money. When an open contract between the lender and the credit reporting agency is in place, your information – good and bad – is reported monthly. However, if the lender you are dealing with no longer has a contract with the credit bureau, usually after about 60 days, that lender’s reports on each of their clients are deleted from that credit bureau’s database. .
While you might wish it happened to you, not so fast. ALL information is deleted, both bad and good. The voucher shows that you are paying off your debts, paying on time, and still under your credit limit on a revolving account. This is the information you to want a potential lender to see.
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The largest and most well-known lenders report to Canada’s two credit companies, Equifax and TransUnion, and will likely continue to do so. But just know that it can happen when you least expect it.
3. How much do you have in your savings account
A balanced approach to managing your money is important, and lenders are prepared to extend credit to those who manage their money wisely. The amount of your savings and other bank account information as well as mortgage details may or may not be shown on your credit report.
If you plan to apply for credit at a financial institution where you don’t have bank accounts or investments, bring your most recent statements to show a lender how much you have. Even if your savings information isn’t listed on your credit bureau, it counts as an asset. When you want to borrow money, assets are an important way to show that you know how to save as well as how to spend.
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Savings – the secret weapon against debt
4. Your tax information
The information you provide when you file your income tax returns with the Canada Revenue Agency (CRA) is not transmitted to your credit report. Credit agencies are not the government and they do not freely exchange information with each other. The government only reports to the credit bureaus when you owe them money, for example when you take out a student loan or if you are in arrears with your payments, for example the government collection department will report on a debt that you have towards them.
12 excuses people find for not filing their taxes
5. Your own requests
Checking your own credit report is not disclosed to lenders who check your credit. Many people have heard that every time your credit is checked, your credit rating and score go down. This is the case with “hard knocks”, when a lender checks your credit report as part of a credit application. Checking your own credit is considered a “twist” and is not reported to potential lenders.
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Get your own credit report for free in Canada
6. Private loans and utility bill payments, except mobile phone contracts
If you’ve borrowed money from a family member or friend to pay for a business, for example, private family loans don’t go to the credit bureaus. Non-traditional lenders, such as small payday loan companies, operate much like private lenders who do not file reports with credit companies. Utility bills, like electricity, gas, or cable, also don’t report your good payment history. If you fall behind, however, utility company collection agencies may file reports on your debt. The exception is contract cell phone bills. They are most definitely reported to the credit bureaus every month.
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The basics of information that is not included in a credit report
A credit report reveals what has happened in the past and because we are creatures of habit we tend to repeat ourselves. When using your own credit report as a conversation starter with a romantic partner, be kind to yourself and each other. Rather than haggling over the mistakes you’ve made, focus on what you’ve learned, what you’re doing differently now that you know more, and how you can help each other develop better financial skills. As they say, some mistakes are fun and worth making again; messing up your credit just isn’t one of them.
Associated reading:
How to Save Money – Strategies for Canadians
Scott Hannah is president of the Credit Counseling Society, a non-profit organization. For more information on managing your money or debt, contact Scott by E-mail , Check www.nomoredebts.org or dial 1-888-527-8999.
