Banks, credit card companies, stores, gas stations and even phone companies offer credit cards. Standard credit cards usually have no fee or a low annual fee. Some of the benefits of a standard credit card include convenience, security, the ability to extend payments over time, low interest on balance transfers, cash back, savings on purchases and loyalty points - and of course, the ability to build a good credit history over time. Premium credit cards charge higher annual fees and may offer more valuable rewards programs, access to airport lounges, insurance benefits and a broad range of other benefits. With rewards cards, you earn points based on the amount you spend, provided your payment history is up to date.

      A credit report is a detailed report of an individual's credit history prepared by a credit bureau. Credit bureaus collect information and create credit reports based on that information, and lenders use the reports along with other details to determine loan applicants' credit worthiness. In Canada, there are two major credit reporting bureaus: Equifax and TransUnion. Each of these reporting companies collects information about consumers' personal details and their bill-paying habits to create a unique credit report; although most of the information is similar, there are often small differences between the two reports.
      Credit reports include personal information such as current and previous addresses, Social Insurance Numbers and employment history. These reports also include a credit history summary such as the number and type of accounts that are past due or in good standing, and detailed account information related to high balances, credit limits and the date accounts were opened. Credit reports list credit inquiries and details of accounts turned over to credit agencies such as information about liens and wage garnishments. Generally, credit reports retain negative information for seven years, while bankruptcy filings typically stay on credit reports for about 10 years.

      A credit score is a number lenders use to help them decide how likely it is that they will be repaid on time if they give a person a loan or a credit card. Your personal credit score is built on your credit history. A decent credit score is essential for your financial well-being because the higher it is, the less of a credit risk you are. There are primarily two types of credit scores, generic scores and custom scores:

• Generic credit scores are used by many types of lenders and businesses to determine general credit risk. You can access your generic score as one score using the same formula across all credit reporting agencies.

• Custom credit scores are developed for use by individual lenders. They rely on credit reports and other information, such as account history, from the lender's own portfolio. They are unique to the specific business, or they may be used by specific types of lenders, such as credit unions. Custom credit scores can apply to specific types of lending, such as mortgage lending or auto lending.

      Identity theft occurs when someone takes information about you and pretends to be you for fraudulent purposes. Every year, thousands of people are victims of identity theft. Your name, date of birth, address, credit card, Social Insurance Number (SIN) and other personal identification numbers can be used to open credit card and bank accounts, redirect mail, establish cellular phone service, rent vehicles, equipment, or accommodation, and even secure employment.
      If you are a victim, the consequences are serious - you can be denied a driver's licence, a student loan, cell phone service. It can take years to undo the damage.

      Your credit score can directly affect the mortgage interest rate a lender offers. Higher credit scores can lower the interest rate, while lower scores may cause them to rise. If you already have a high credit score and want to consider further lowering your mortgage interest rate, can you choose a shorter amortization period if you can handle a higher monthly payment. For example, a 15-year term instead of a 25-year loan will not only reduce your interest rate, it will cut the total interest you pay over the term of the mortgage. Short-term and variable rate mortgages are less risky for lenders, so they offer lower interest rates. But remember, short term and variable interest rate mortgages are risky for you if interest rates rise. That's why many people want the security of a "locked-in" longer term interest rate.