Smart credit file management

There are several reasons why you might resort to credit: to pay for unforeseen expenses, purchase goods immediately, pay for your studies, invest, etc. But did you know that bad financial habits could ruin your credit file and damage your future financial reputation?

What exactly is a credit file?

Your credit file is created when you first borrow money. Then, each time you take out a loan or get a credit card, the financial institutions, finance companies and retailers concerned communicate specific factual information regarding transactions they have with you to credit reporting agencies¹.

Among other things, your credit file shows whether or not you have paid your debts and other bills on time, and how much you have already borrowed. This information helps credit grantors determine your solvency, i.e. your ability to pay back your debts.

Bad habits to avoid

A few cases of wrongdoing or something that may seem harmless today could later translate into higher interest rates, the need to have an endorser or even a “no” for an answer.

Here are some examples of bad habits that could ruin a credit file:

• Writing bad cheques against your chequing account.
• Making late payments.
• Borrowing from several financial institutions or accumulating substantial personal debts.
• Making irregular payments.

Be sure to use your credit card wisely. Avoid useless and impulsive purchases and always pay your credit card balance each month. You’ll be better off making the minimum payment on time than paying the entire balance late.

Limit the number of credit cards you own, especially retailer credit cards which have higher interest rates than financial institution credit cards. Also remember that you should use credit cards only for unexpected situations, reservations and online purchases, when you know you’ll be able to reimburse everything in the following days.

You might be better advised to take out a loan to clear your unpaid balance, for example a personal loan or line of credit. You’ll also pay less interest.

Most VISA Desjardins credit cards offer, for an annual fee, the option of a reduced interest rate.

Use the How to select a card? simulator to find the card best suited to your needs and budget.

Get information on your credit file

As a consumer, you have the right to access your credit file information.

For more information about credit files or to access your own credit file, visit the Equifax Canada or TransUnion Canada Web site.

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1. The 2 largest Canadian credit reporting agencies are TransUnion Canada and Équifax Canada.