New Chapter 4: Understanding Credit
Think of your credit score as a financial report card — a quick way for lenders like banks, credit card companies, and mortgage providers to see how reliable you are when it comes to borrowing and paying back money. The higher your score, the more confident they feel that you’ll repay what you owe on time.
You don’t “sign up” for a credit score. If you’ve ever had a credit card, taken out a loan (including student loans, car loans, or a mortgage), opened a line of credit, or even signed certain utility agreements, you likely already have one.
How it works
There are three main credit reference agencies that track your credit history and calculate your credit score: Equifax, Experian, and TransUnion. Depending on where you live, you might have a score with two or all three.
Each agency collects information from lenders, landlords, and service providers to build a profile of your borrowing and repayment history. Because each agency might have slightly different information, your score can vary between them. Checking all three can give you a more accurate overall picture.
What’s included in your credit history?
Your credit report can include:
Which credit cards you have and how long you’ve had them
Your payment history (on-time vs. missed payments)
Details on loans (personal, car, student, etc.)
Mortgage details, if you own a home
Rental agreements, if your landlord reports them
Agreements with service providers (gas, internet, phone)
Records of bankruptcies or court judgments
This information is used to create two things:
Your credit report — a detailed record of your borrowing history.
Your credit score — a single number that sums up your creditworthiness.
What’s not included?
Your credit report does not contain your income, how much you have in savings or investments, or any medical history. It’s focused purely on how you’ve borrowed and repaid money in the past.
Why it changes
Your credit report and score aren’t static — they’re updated whenever new information is reported to the agencies. That could be paying a credit card bill on time (which helps your score) or missing a payment on your utility bill (which can hurt it). Over time, your score reflects your most recent financial behaviour, which is why consistent good habits are so important.
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