Instead, Canada's two national credit bureaus - Equifax Canada and TransUnion Canada - simply track your patterns of behaviour when it comes to handling mortgages, bank loans, credit cards and other major debts. These agencies grade your performance, then produce a financial report card, better known as a Canadian credit report, which they share with all banks, credit unions, credit card companies and other lenders in Canada.

Pay off all your bills on time while maintaining a reasonable debt-to-income ratio ... you get an A+. Miss any bill payments while stretching your ability to pay back your creditors ... you get a B through C to D grade. Go bankrupt and leave your lenders hanging ... you get a big fat failing F.

These grades are translated into FICA credit scores, which run from 375-900. An A+ would be 800 or better. Any bank manager in Canada would probably not let you leave their office without giving you money. An F puts you below 620 and makes getting any new loan, credit card or mortgage almost impossible.

Fortunately, your Canadian FICA credit score is not a static number. It is very dynamic, and can change radically over your lifetime. Credit scores drop or climb as your financial circumstances change.

Canadian credit reports critical for young Canadians too

Take young Canadians for instance. As a new adult just entering the marketplace, you generally have no track record of handling credit. The result? You automatically start with a lower credit score even though you've done nothing wrong. Equifax or TransUnion simply don't know how you will behave because you haven't had the opportunity to prove yourself when it comes to handling credit.

But as you develop a career, get your first credit card, maybe add a car loan or lease, your credit history is being created in Canada. Perform well and you may even qualify for a mortgage at a young age. Treat credit irresponsibly and you will put yourself in a poor financial position for any future loans or mortgages.

My daughter is a good example. Just like school, teachers love it when their students show up every day for class. The same holds true for lenders. They love stability and consistency. At 22, Carmen has been working several years in a good job. It demonstrates both stability and consistency - solid traits that count towards your credit score.

She got a Visa credit card with a $1,000 limit at age 19. She almost always pays off the balance every month. When she can't, she at least pays the minimum required by the due date. She gets top marks for performing well and on time. It's no different than term papers in school. Pay little attention to the assignment and hand them in late? Most professors will fail you. Complete the work in a timely fashion will result in better marks. Same holds true for your treatment of bills and payments. The lenders want to feel confident that you are taking your debts seriously.

Last year, she wanted a car (and I heartily agreed it was time to stop using my vehicles). So she looked around at Mazda, Toyota and Honda imports. She weighed design appeal, gas mileage and overall costs, and then settled on leasing a Toyota Yaris.

Naturally, given her age, the local Toyota dealership automatically asked me to co-sign the four-year lease. No thanks. I love my daughter but wasn't interested in adding a liability to my debt-load. And I wanted her to stand on her own financially.

So the dealership began the usual credit checks, pulling Carmen's Canadian credit report from Equifax, getting her employment T4, even wanting her university transcripts (which really surprised me). Quite frankly, the credit manager was pessimistic that Toyota Canada would say yes, given their extremely rigid credit policies.

So imagine everyone's amazement when Carmen was approved by one of the toughest lenders in the country. An excellent credit rating, solid work history and good university grades all added up to a positive score.

And that's a simple example of how a good report card, both educationally and financially, can result in a brighter financial future for you. Working hard, paying attention to the details and completing your responsibilities in a timely fashion always pay off.

Curious about your Canadian credit score? You can instantly obtain a complete credit report online from either Equifax Canada or Trans Union Canada for just a few bucks. It will give you a clear idea of your current credit rating and ways you might be able to improve your score. It's a great idea to check it at least annually to see what the banks see when it comes to your credit history.