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How to understand your credit report

5 min read

How to understand your credit report

Written By

Meghana Agashe
Meghana Agashe

Reviewed By

Clay Shiffman

Ah, the credit report. It's like a report card for adults, but instead of grades, you get judged on how well you manage your finances. If you're feeling a little overwhelmed, don't worry—we got you. We'll help you decode your credit report, so you can ace this adulting requirement without feeling the need to pull your hair out.

This article will cover all the information you need to understand what's on your credit report, what to look for, and how to make the most of the valuable insights it provides. So let's dive in and get you feeling confident about your credit report.

What’s on your credit report

First things first, what is a credit report? A credit report is a summary of your credit history. It’s used by lenders and other financial institutions to assess your creditworthiness.

Your credit report contains a wealth of information about your credit history, including:

  • Personal Information: This includes your name, date of birth, social insurance number, and current and previous addresses.

  • Employer History: Your credit report may also include information about your employment history, including your current and previous employers.

  • Credit History: This is the most important part of your credit report and includes information about your credit accounts, such as credit cards, loans, and mortgages. It also includes your payment history, credit utilization, and credit inquiries.

How to get your credit report

Before we start to dive into how to read your credit report, let’s first talk about how to obtain your credit report. There are several ways to go about it and get your credit report—both paid and free. You’re entitled to one free credit report per year from each of the major credit bureaus in Canada: Equifax and TransUnion. You can request your report by mail, phone, or online. If you want to access your report immediately, you can use a credit monitoring service or your bank may offer a free credit report service.

What to look for on your credit report

In a nutshell, when reviewing your credit report, you should look for:

Accuracy of personal information: Make sure that all the information on your credit report is accurate, including your personal information, employment history, and credit accounts.

Payment History: Your payment history is one of the most important factors that lenders consider when assessing your creditworthiness. Make sure that your payment history is up to date and that it correctly reflects how you’ve been making your payments.

Credit Utilization: Your credit utilization is the amount of credit you're using compared to your total credit limit. Check your credit report for what your credit utilization looks like. Ideally, you should try to keep it below 30% to maintain a good credit score.

Credit Inquiries: When you apply for credit, the lender will make an inquiry on your credit report. Too many inquiries can negatively impact your credit score, so try to limit your credit applications.

Sounds like a lot, doesn’t it? Don’t worry, all you need to do is follow this step-by-step guide on how to read and interpret your credit report, so you can have a better understanding of your financial health:

Step 1: Read the personal information section

Once you have your credit report in hand, the first section you will come across is the personal information section. This section contains basic information about you, such as your name, address, and Social Insurance Number. Review this section carefully to ensure all the information is accurate.

Step 2: Check your credit history

Next, let’s move on to the most important part of your credit report—your credit history. This section lists all your credit accounts and payment history. Review each account carefully to ensure that all the information is accurate. Make sure that each account belongs to you and that the payment history is correct.

Step 3: Understand the credit score

In this section, you will also come across your credit score, which is a three-digit number that represents your creditworthiness. It’s based on your credit history, payment history, and other factors. The higher your credit score, the more likely you are to be approved for credit and to receive better interest rates.

Step 4: Look for errors

Even if you’re diligent about paying your bills on time and keeping your credit in good standing, errors can still appear on your credit report. Look for mistakes, such as incorrect account information, duplicate entries, or payments that were incorrectly marked as late. Dispute any errors you find with the credit bureau to remove inquiries from your credit report.

Step 5: Identify areas for improvement

After reviewing your credit report, you may find areas where you can improve your credit score. This could include paying down debt, making payments on time, or disputing errors on your credit report. Take note of any areas that need improvement and create a plan to work on them.

Step 6: Monitor your credit report regularly

It's important to monitor your credit report regularly to ensure that all the information is accurate and up to date. By doing so, you can catch any errors or fraudulent activity before it becomes a problem. You can also track your progress in improving your credit score over time.

If you’re looking for options to build or improve your credit, KOHO’s credit building tool might be a great option. KOHO will perform a soft check on your credit to determine your balance. Then, each month KOHO reports this small amount of money to the credit bureaus as repayment history, which helps build your credit history.

What different letters on your credit report mean

Your credit report has codes that lenders use to tell the credit bureaus about how and when you make payments. These codes have two parts: a letter shows the type of credit you're using, and a number shows when you make payments. Different letters and numbers mean different things.

Let’s first start by understanding what the letters mean:

"I" stands for Installment. This means you borrowed a certain amount of money and you're paying it back in fixed amounts until you pay off the whole loan. Examples of Installment accounts are car loans or personal loans.

"O" stands for Open status. This means you can borrow money whenever you need to, up to a certain limit. A line of credit is an example of an Open status account.

"R" stands for Revolving. This means you can borrow up to a certain amount of money, but your payments change depending on how much you borrowed. Credit cards are an example of Revolving credit.

"M" stands for Mortgage. This is a loan you get to buy a house. Mortgages may or may not show up on your credit report, depending on the credit reporting agency.

What different numbers on your credit report mean

According to the Financial Consumer Agency of Canada, the numbers on your credit report mean the following:

Number Meaning
  • Too new to rate
  • Approved, but not yet used
  • Paid within 30 days of billing
  • Pays as agreed
2 Late payment: 31 to 59 days late
3 Late payment: 60 to 89 days late
4 Late payment: 90 to 119 days late
5 Late payment: more than 120 days late, but not yet rated "9"
6 This code isn't used
7 Making regular payments using one of the following debt management options:
  • a consolidation order
  • orderly payment of debts
  • consumer proposal
  • debt management program with a credit counselling agency
8 Repossession
  • Written off as a "bad debt"
  • Sent to collection agency
  • Bankruptcy

How to interpret the code on your credit report

Now, let’s look at a few examples of the credit report codes that use letters and numbers together, and what they might mean:

  • If you have a car loan and you make all your payments on time, it will likely be reported as "I1." This indicates that you have an installment loan that you are paying on time.

  • If you have credit card debt and you’re being contacted by a collection agency for payment, it’ll be reported as “R9.”

  • If you have a line of credit and you are regularly making payments using a debt management program, your rating may be reported as "O7." This indicates that you have an open credit account and you’re making regular payments through a debt management program.

As you may have observed by now, the best rating or at least the rating you want to aim for should be 1. Any number higher than 1 will likely hurt your credit score.


To summarize, reading your credit report is an essential step in managing your financial health. Armed with the knowledge of what to look for and how to interpret the information on your report, you can better understand your creditworthiness and make informed decisions about your financial future.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!

Meghana Agashe

Meghana is a content strategist with experience writing for companies in the technology sector. Originally from India, Meghana has been living in Canada since 2019, where she continues to explore her passion for content marketing.



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