Consumer Credit in Canada

August 1, 2009  |  Consumer Credit

Consumer Credit in Canada

The most simple definition of consumer credit in Canada is a definition of credit itself. Before we outline what Canadian consumer credit is, lets review what credit itself means.

Definition of Credit

Credit is an agreement between multiple parties, that involves one party agreeing to loan cash or resources to another party. When one party extends credit to another an agreement is made that guarantees the loan will be repaid. Repayment arrangements on loans often vary, however, most require a regular monthly payment be made by the borrower.

Credit and Debtor

The individual or business extending credit is known as the creditor. The recipient of the loan, the individual or business borrowing, is known as the debtor. Together the debtor and credit are a basic representation of credit.

Consumer Credit

Now that you have a basic understanding of credit, we can review what consumer credit is. The term consumer credit is used to define credit that is extended to individual consumers in Canada. A personal loan, car loan, mortgage or personal credit card are all classic examples of consumer credit.

Consumer Credit and Credit Reports

In Canada almost all active consumer credit reports to the two credit bureaus and can affect consumer credit scores. To find out more about consumer credit in Canada and how it affects your credit score see our Credit Scores in Canada article.

Types of Consumer Credit

There are two main types of consumer credit that report to Canadian Credit Bureaus. On your credit file loans report as Credit Trade Lines. The two different types of credit trade lines are:

  • Revolving Trade – Revolving trade lines indicate a revolving loan such as a credit card or personal line of credit
  • Installment Trade – Installment trade lines represent installment loans (loans with a fixed payment) such as car loans and personal loans

For more information on consumer credit in Canada visit out Credit Questions page.

Get your Canadian credit score at our Check Your Credit page or find out how to get a limited Free Canadian Credit Report now!

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