Rebuilding Credit in BC, Canada: What is Payment History?

Payment history accounts for 35% of your credit rating and is the most influential factor when determining your score. Good money management behaviours – like consistently paying bills in full and on time – will positively impact this three-digit number. But if you have accounts in collections, have filed for bankruptcy, or have a frequency of late or missed payments, your credit score will take a hit.
Understanding how your payment history affects your credit score, therefore, is imperative.

Why Does Payment History Matter in BC?


Your credit score is an overview of your financial well-being, which lenders study to determine the likelihood of you paying back a loan. 

If you have multiple missed or overdue payments on your report (combined with a low score), you may be unable to obtain a mortgage, car financing, or a line of credit. It can also hamper career and housing prospects since employers and landlords review credit reports when vetting potential applicants.

Understanding How Payment History is Calculated in BC

In Canada, there are four kinds of accounts recorded on credit reports. They include:

• Installment Accounts (I): Regular, fixed payments are made until the loan is paid in full. Examples: car loans and student loans.

• Open Status Accounts (O): Balances are paid at the end of each billing cycle and payment amounts may vary depending on usage.

Examples: cell phone bills or utilities.

• Revolving Accounts (R): Money is borrowed, as needed, up to a prearranged limit and minimum payments can be made while carrying a balance. Examples: credit cards and lines of credit.

• Mortgage Accounts (M): Funds are borrowed for a pre-approved amount, term, and interest rate. Examples: home mortgages.

Each account is also assigned a corresponding code between 0 to 9 to reflect how well your payment obligations are being met. A high number can signify to lenders that you are a risky loan applicant:

0 - reserved for new accounts

1 - indicates loans are paid within 30 days

2 - indicates a late payment (31-59 days)

3 - indicates a late payment (60-89 days)

4 - indicates a late payment (90-119 days)

5 - indicates a late payment (+120 days)

6 - this code isn't used

7 - indicates participation in a consolidation order, consumer proposal, or debt management program

8 - indicates repossession

9 - indicates the loan is in collections or a declaration of bankruptcy has been made


How to Repair Bad Payment History in BC?

Late or missed payments are not something to ignore. In Canada, they can remain on your accounts for up to seven years, thus putting off potential lenders and pulling down your score. There are ways to repair your payment history, however – and getting caught up on your financial obligations is a great place to start. Establishing a recent positive payment history can tip the scales in your favour and show lenders that you are a responsible loan candidate. 

Contact TransCanada Finance to Inquire About a Credit Repair Auto Loan

If your low rating is stopping you from reaching your financial goals, consider restoring your credit with an auto loan. As you make regular and prompt payments, your credit repayment history will steadily improve – and raise your score alongside it.

Whether you have bad credit, no credit, or have filed for a consumer proposal, our team at TransCanada Finance can help you find solutions that work for you.

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