05/01/2015 11:37 EDT | Updated 05/01/2016 05:12 EDT

Majority of Canadians have never checked their credit score: BMO report

According to a recent report by the Bank of Montreal more than half of Canadians have never checked their credit score.

The survey, conducted by Pollara, also found that 31 per cent of Canadians don't know how to achieve a good credit rating and 20 per cent believe that checking their credit could actually have a negative impact.

CBC money columnist Rubina Ahmed-Haq explained to On the Coast host Stephen Quinn why credit scores matter.

What is a credit score?

Your credit score is a number, based on specific information on your credit report which is used by lenders to predict the likelihood that you will repay your debt. A credit score is a number between 300 and 900 -- the higher the number the better the borrower.  

Credit scores take into consideration factors that include payment history, outstanding debt, credit history age and whether you apply for new credit too often.  27 per cent of Canadians have a credit score between between 750 to 799, which is quite high and should not encounter any problems securing a loan.

Why does your credit score matter?

Your credit score affects all aspects of your life.  When you buy a car or purchase a cell phone contract, your credit report can be accessed and what's in it can determine if your application is approved. It contains information about every loan you've taken out in the last six years - whether you regularly pay on time, how much you owe, what your credit limit is on each account and and which creditors have been trying to access your information.

How can we improve our credit score?

Pay your bills on time. Experts also recommend using only 50 per cent of your available credit at any time. 

How can I get a copy of a my credit report?

For a fee you can get your credit report instantly from Equifax Canada or TransUnion or you can ask for it to be mailed to you for free. All you need is your social insurance number, driver's license and other identifying information to fill in the online form.

What if there are errors on my credit report?

Some credit bureau watchers estimate that there are errors in 10 to 33 per cent of credit files.  The problem can be solved by notifying the credit reporting company immediately and providing supporting documentation.

To hear the full interview with CBC money columnist Rubina Ahmed-Haq, listen to the audio labelled Credit scores explained