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How Canadian Credit Rating System Works

The credit reporting system, relied upon by most individuals for obtaining credit from financial institutions, is largely misunderstood. The major credit reporting agencies have strict guidelines for gathering and processing of both personal and corporate information, as well as the reporting of such information to their members.

Equifax and TransUnion are the major personal credit reporting agencies in Canada. Dun & Bradstreetis the primary agency for corporate credit reporting. These credit reporting agencies all have the samebasic operating structure and function like “clubs”.

Credit reporting agencies or credit bureaus collect information about consumers’ financial affairs and sell that information to their business members, such as credit grantors, employers and insurance companies. The credit bureaus charge annual fees as well as a fee for each credit report requested by its members. As a part of their membership, financial institutions also agree to provide the latest credit information on their clients, on an ongoing basis, so that other members (financial institutions) can better assess client creditworthiness.

There are different credit bureau agencies in Canada. The majority of consumers are familiar with Equifax, which we will focus primarily on.

Credit bureaus obtain their information from three major sources:

Consumers supply information, primarily from filling out application forms for credit and for property rentals.

•Public records provide information on such matters as bankruptcies, court judgments, foreclosures and agreements registered with Provincial authorities.

The major credit grantors and collection agencies send their credit files electronically to the credit bureau every month, resulting in files that include the account number, outstanding balance, and a nine point scale indicating whether a payment was made on time or late.

In order for a member of Equifax to obtain a copy of a consumer’s credit report, the member must obtain written authorization from the consumer. The member simply will forward the consumers information and a match is made to Equifax’s database. As you can imagine during this process data may be entered incorrectly, resulting in duplicate credit files and miscellaneous errors on consumer files.

One of our responsibilities in the rehabilitation of the debtor is to ensure that the consumer understands the importance of monitoring their credit file on a regular basis. It is a simple process to request and receive this information. The debtor simply completes a form titled “Request to Obtain my Credit History Report”. If you require an copy of this form please email us at Info@EdmontonDebtReducers.com and we will email you an form. The completed form can then be faxed or mailed to Equifax. The request will take approximately two weeks to process and it is free of charge. A quicker way is to obtain a credit report is to request this information online. There is a fee of approximately $15.00 to process an online request, and a credit card is necessary for this transaction.

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