Credit Information

Whether financing a home, car or an education, you want to make wise credit decisions and steer clear of moves that end up doing more harm than good.

In most cases, to borrow money you need to have good credit. Good credit means establishing a history that shows you have fulfilled agreements between you and your creditors. Let’s continue learning about credit.

Establishing credit is an important first step when you are looking to finance things like a house, vehicle or education. When looking to establish credit, you want to ask yourself, "Can I afford to make this payment and am I willing to make payments for the full term?" Establishing a good credit history makes obtaining financing at lower interest rates easier. Some simple ways to establish credit are:

• Establish a savings or chequing account at your local bank
• Apply for a retail or bank credit card or consider a secured credit card

Now that you have established credit, it is important to build a favorable credit rating. Here are some ways to maintain good credit:

• Pay on time
• Do not go over your credit limit
• Pay at least the minimum amount due — and more if possible
• Avoid impulse spending
• Notify creditors of address changes
• Contact your creditors to work out a solution if you are having problems making your payments

Your credit report shows how well you manage your credit and lists what type of credit you use, the length of time your accounts have been open, and whether you have paid your bills on time. It also tells lenders how much credit you have used and whether you are seeking new sources of credit.

Potential creditors such as banks, automobile finance companies and credit card companies review your credit report to evaluate the potential risk of failure to repay the credit. Credit scores help lenders determine who qualifies for a loan and at what interest rate.

A credit score is a number that summarizes your risk level. Some factors that may make up your credit score and determine your access to credit are:

• Payment History
• Amount of Debt
• Length of Credit
• New Debt
• Type of Credit

Typically, any detrimental items stay on your credit report for seven years. You should check your credit report at least once a year. When you do, make sure all information is accurate.

When creditors review your credit report, they want to know you will keep your promise to repay the loan.

Borrowers have numerous protections under the law. Such laws include the following:

Province	Legislation
British Columbia	Business Practices and Consumer Protection Act
Alberta	Fair Trading Act
Saskatchewan	Consumer Protection Act Credit Reporting Act
Manitoba	The Consumer Protection Act The Discriminatory Business Practices Act The Personal Investigations Act
Ontario	Consumer Protection Act, 2002 Discriminatory Business Practices Act Consumer Reporting Act
Quebec	Consumer Protection Act
New Brunswick	Cost of Credit Disclosure Act
Nova Scotia	Consumer Protection Act Consumer Reporting Act
Prince Edward Island	Consumer Protection Act Consumer Reporting Act
Newfoundland and Labrador	Consumer Protection and Business Practices Act
Yukon	Consumers Protection Act
Northwest Territories	Consumer Protection Act
Nunavut	Consumer Protection Act

BANKRUPTCY
A legal proceeding under which the property of a debtor unable to pay his or her debts is transferred to a trustee. The trustee then liquidates the debtor's assets and distributes the proceeds to the debtor's creditors in accordance with the priorities set out in the Bankruptcy and Insolvency Act.

CAPACITY
The amount of cash the customer has available to make the payments on a new debt after all existing obligations have been paid.

CHARACTER
Stability plus willingness to pay equals a borrower's financial character.

COLLATERAL
An asset that is pledged as security for a loan or financing, such as a vehicle. The creditor has the right to take control of and sell the collateral if payments are not made as agreed.

CREDIT BUREAU
A company that gathers data on how individuals are paying or have paid their credit obligations. The information is provided to creditors when specifically requested.

CREDIT HISTORY
The record of how a person has borrowed and repaid debts.

CREDIT LINE
A specific amount of money available for credit use by a borrower.

CREDIT REPORT
The form the credit bureau issues containing the financial and personal data about an individual.

CREDIT SCORE
A numerical representation of the likelihood of an individual meeting his or her credit obligations, calculated using statistical models.

CREDITOR
The company or person providing (or holding) the financing or loan. Also known as a lender or finance source.

CREDITWORTHINESS
An individual's past, current and future ability to repay debts, in most cases determined by reviewing the individual's credit history.

DEFAULT
A failure to meet credit obligations as agreed.

FINANCE CHARGE
The cost of credit expressed as a dollar amount. This is the amount charged to the purchaser by the lender for use of money.

INQUIRY
A creditor request for a copy of an applicant's credit report. Inquiries are noted on the report.

LATE CHARGE
A dollar or percentage charge imposed by a lender on a borrower when the borrower fails to make a payment within the specified period after the payment is due.

LEASE
A financial transaction in which an individual contracts for use of a vehicle under specific terms such as kilometres driven, monthly payment, turn-in condition at lease-end, liability for physical damage, and fees and penalties.

LIENHOLDER
An individual, partnership or corporation with a security interest in an asset.

SECURED FINANCING
A form of financing in which collateral backs the credit.

UNSECURED FINANCING
Financing that does not require collateral.

ADD-ON PRODUCTS
These include, but are not limited to, extended service plans, approved dealer-installed equipment, rust proofing and sealant packages that are added to the total cash price of a vehicle and included in the amount financed.

AMOUNT FINANCED
This is the total amount of credit provided to you and is subject to finance charges. It is determined by the sale price of the vehicle plus any charges for taxes, title, license fees, service contracts - such as an extended service plan - and any other fees, less the down payment, manufacturer's rebate, or trade-in.

APR
Annual Percentage Rate is a measure of the cost of credit expressed as a yearly interest rate. All lenders are required to disclose their rates as an APR to allow consumers to make a proper comparison.

CO-BUYER
A second person (can be an individual or a corporation) who shares the same rights under the contract as the primary borrower, and is equally liable for repayment of the loan.

DOWN PAYMENT
The total amount of money you pay up front (cash, rebates and trade-in) to reduce the amount financed.

FINANCE AGREEMENT
The written contract between the parties in a financing transaction. The terms as stated in this agreement are legally binding on both parties.

GUARANTOR
A person who is liable for repayment of a loan, but receives nothing in return for assuming this liability.

MANUFACTURER'S SUGGESTED RETAIL PRICE (MSRP)
The retail price of the vehicle as recommended by the manufacturer - often called the "sticker" or list price.

SECURITY DEPOSIT
Cash amount collected at the beginning of the lease as security for performance of all lease obligations and refunded at lease-end unless there is excess wear and use on the vehicle or if the kilometerage exceeds contract limits. Allowable charges would be deducted before a final distribution of the security deposit is made.

TERM
The number of months you agree to pay off the lease or finance contract (loan) with equal monthly installments (payments).