Is there anything that you can do to get a negative item removed from your credit report? Yes, there is.
When it comes to the health of your credit score, one of the most important things to do is make sure your credit report is up to date and error-free. The truth is that mistakes happen on your credit report. It isn’t necessarily fraud; it can be just an accident.
Taking the time to check your report is one way to protect your credit score. Plus, protecting your credit score can lead to better interest rates, a nicer apartment, and even a better job.
After all, it’s often one of the first things that a bank, credit union, or alternative lender will examine when you apply for a new credit product, such as a personal loan, a line of credit, vehicle financing, or a mortgage.
Unfortunately, any negative information on your report can lead to your loan application being denied, especially if you aren’t aware of it and the information is wrong. Here is what you need to know about credit report errors and how to get them corrected.
Credit Reports Inaccuracies
Essentially, your credit report is a detailed file that both of Canada’s credit bureaus (Equifax and TransUnion) compile for you after you start using credit products. Although each bureau holds a slightly different version of your report, both documents detail how you’ve used all your credit products over the past 10 or so years.
What Canadians Know About Their Credit Reports
If you apply for new credit, let’s say a loan, your potential lender might inspect your credit report because it shows them how you’ve handled debt in the past. Sadly, many credit users don’t even know how to check their reports or recognize the inaccuracies when they see them. In fact, a 2014 study by the Public Interest Advocacy Centre (PIAC) shows:
- Only around 17% of credit users (aged 18 or over) in Canada have checked their credit within the last 3 years.
- 50% – 65% of those credit users say they understood the terms of their report and what their credit scores meant.
- Around 45% – 50% remained neutral on the subject or didn’t understand what their report or scores meant.
- About 18% of users who check their credit regularly have discovered some sort of inaccuracy on their report.
- Of those users, 80% actually managed to resolve the inaccuracy and say it took about 4 hours to correct the problem.
- Overall, 10% of those credit users think they were rejected for various financial services due to an inaccuracy on their credit report.
How Credit Reports And Credit Scores Are Affected By Inaccuracies
While it might not seem like a big deal at first, one error can cause problems for your credit report. If left uncorrected, it can even lead to a drop in your credit score (which normally ranges from 300 to 900).
Once your credit score range is between 300 and 560 it’s considered to be poor. With poor credit, it can be difficult to get approved for large amounts of credit, favourable term conditions and low-interest rates. This is because your credit scores represent the likelihood that you’ll make your payments on time. Plus, it can take a lot of time and effort to get your score back to the good range (660-900).
All this to say, if you do find some kind of inaccuracy on your credit report, it’s extremely important to resolve the situation as fast as you can. Although there are relatively fast and easy ways of doing this, the longer the error goes uncorrected, the worse your credit and approval chances will be.
Checking Your Credit Report In Canada
Now that you’re aware of what can happen if there’s an inaccuracy on your credit report, let’s talk about what kinds of common errors you may come across:
- Inaccurate Personal Details – Simple mistakes such as the wrong name, birthdate, or mailing address can spell disaster because you could end up with someone else’s credit information (or vice versa).
- Wrong Account Information – It’s also possible that your lender didn’t report your payment or account activity correctly. For instance, if you paid your debt on time but it was accidentally labelled as late or defaulted.
- Falsified or Stolen Accounts – Identity theft and fraud are two unfortunate events that can affect your credit, not to mention complicated and time-consuming to deal with afterward.
- Uncorrected Negative Information – Missed payments and other negative credit actions stay on your report for several years (unless due to an error or fraud). If so, a bureau may forget to remove the information after the allotted time period.
How To Get Something Removed From Your Credit Report?
Before you get started, if the negative information wasn’t the result of an inaccuracy or crime, neither Equifax nor TransUnion will remove it from your credit report prior to the designated date. Otherwise, there are a few different ways to get an error or other negative incident removed from your credit report:
Wait For It To Go Away Naturally
Negative information will remain in your credit history for several years, the length of which depends on the incident and credit bureau. Common examples of negative information include:
- Late/missed payments = 6 years
- Consumer proposals = 3 – 6 years
- Bankruptcies = 6 – 14 years (depends on the bureau/province and whether it’s your first or second bankruptcy)
In these cases, the simplest way to deal with the negative information is to wait until Equifax and/or TransUnion clears it from your report. As mentioned, whether the incident was intentional or accidental, neither bureau will remove it immediately, because it was technically your responsibility to pay your debt on time.
File A Dispute With The Credit Bureaus
Unfortunately, if you were responsible for the incident, there’s not much you can do. However, if you find an error or sign of identity theft on your credit report, you can file a dispute with the bureau that holds it (always check both versions, if possible). This can be done easily by completing the proper forms and mailing or faxing them to the bureau.
While you may have to fill out different forms or details with Equifax and TransUnion, the basic dispute process is similar and typically goes something like this:
- Once the bureau receives your forms, they will review your claim, as well as your personal and financial information to confirm your identity.
- For the dispute to be taken seriously, be sure to provide any proof you have that shows that the incident was not your fault (financial statements, etc.)
- Next, one of their agents will investigate your case, which could involve contacting the business or lender that you claim has reported the error.
- If the error was the bureau’s responsibility or your identity was stolen, the matter will be resolved internally (a fraud alert may be put on your report).
- If your dispute is acceptable, the bureau will inform you of the results, then update the appropriate documents.
Keep in mind that even if you have sufficient proof of your dispute’s viability, the whole investigation and updating process can take a few days, so contact both credit bureaus right away if you think negative information is harming your credit. It may also help to include a consumer statement that explains your current situation. Consumer statements can be up to 200 words in Saskatchewan and 100 in the rest of Canada.
How To File A Dispute With TransUnion?
You can initiate a dispute with TransUnion online, by phone or by mail.
- Online – To start a dispute online with TransUnion simply start an application through TransUnion’s online portal.
- By Phone – You can speak to a TransUnion representative by calling: 1-800-663-9980 (for English service) or 1-877-713-3393 and 514-335-0374 (for French service).
- By Mail – To initiate a dispute by mail you’ll need to download, print, and fill out an Investigation Request Form (English form or French form). You can send your completed form to the following address:
TransUnion Consumer Relations Department (for English service)
P.O. Box 338, LCD1
TransUnion Centre de relations au consommateur (for French service)
CP 1433 Succ. St-Martin
Laval, QC, H7V 3P7
How To File A Dispute With Equifax Canada?
You can initiate a dispute with Equifax online or by mail. Regardless of which option you choose, you’ll need to complete and submit the Consumer Credit Report Update Form.
- Online – To start a credit report dispute online, you can visit here.
- By Mail – To file a dispute by mail, download, print and complete the Consumer Credit Report Update Form and send it to the following address:
Equifax Canada Co.
Consumer Relations Department
Box 190 Jean Talon Station
What Documents Do You Need To File A Dispute With A Credit Bureau?
Depending on the credit bureau and methods you choose to file a dispute with, the documents required will vary. However, generally, you can expect to provide the following information:
- Your basic personal details such as your name, date of birth, address, phone number, Social Insurance Number (SIN)
- Your employment information
- The name of the company associated with the item you want to dispute
- The account number of the item you wish to dispute
- The reason why you wish to dispute the item
- Documentation that supports your dispute
Can You Remove An Error From Your Credit Report With A Goodwill Letter?
If neither credit bureau accepts your dispute because the negative occurrence was your responsibility, you can try sending a “goodwill letter” to the lender or collection agency that holds your debt and has been reporting your payment activity.
In it, you would explain your reason for being late on your payments and respectfully ask for them to delete any negative entries from your account.
They might agree to it if you’ve been a good client up to that point and assure them that you will not miss any more payments. They can then report the new information to whichever bureau(s) they work with.
Can You Remove An Error From Your Credit Report Through A “Pay For Delete” Deal?
It’s possible your lender or collection agency will not consider your goodwill letter acceptable, in which case you may have to pay your debt to get the negative entry deleted. While this may drain your finances, it can certainly be an effective strategy.
If you can’t pay your lender or debt collector back in full, try offering them a partial lump sum payment, otherwise known as a debt settlement. Afterward, get the whole arrangement in writing. Never try a “pay for delete” deal over the phone.
Can You Remove An Error From Your Report Through A Credit Building Agency?
In reality, no one except the credit bureaus can get something immediately removed from your credit report, unless it’s a lender or collection agency reporting new information.
Beware of this scam
So, if a “professional” tells you they can have your negative information wiped clean for a price, they are likely trying to scam you. No legitimate operation will ever claim that they can magically make your credit blemishes disappear.
But some financial agencies offer credit building tools that are not a scam. They are easy to manage credit products like small loans and secured credit cards.
If you continually make responsible payments, they should report the positive activity to the bureaus and your credit will improve gradually.
Watch out, as certain credit building products may have high interest rates, short payment plans or require you to offer some form of security, such as a cosigner (guarantor loan) or collateral (secured loan), both of which can increase your risk.
What Can You Do If Your Credit Bureau Rejects Your Dispute?
If you think you’re not being treated fairly or you’re unhappy with how your dispute investigation went, try filing an official complaint with Equifax, TransUnion or your financial institution (as long as it’s federally regulated). In either case, the complaint may reach a higher level employee and be taken more seriously.
If this strategy doesn’t work, you can also complain to your provincial or territorial Consumer Affairs Office, where you can at least get some advice on how best to proceed. Once again, it can take time for any documents to be processed and results to be seen, so make sure to file your complaint sooner rather than later.
The Bottom Line About Removing Negative Item Removed From Your Credit Report
Errors and incorrect information can seriously impact the health of your credit, that’s why you should regularly monitor your credit report and score. Thankfully, there are many ways you can check your credit in Canada, which makes keeping up with your financial health easy and more often than not, free.
Removing An Error On Your Credit Report FAQs
What is a consumer statement?
What happens when you file a dispute with the credit bureaus?
Can errors on my credit report affect my credit scores?
|Business Credit Report
|A detailed report that is meant to provide potential lenders with information to allow them to determine the business’ creditworthiness before extending credit. There is much more information in a business credit report when compared to an individual’s credit report. Business credit reports are generated and regulated by the credit bureau.
|Business Credit Score
|A number that represents a business’ creditworthiness based on information within the credit report. The credit bureau calculates and regulates business credit scores.
|Consumer Reporting Act
|A governing body that oversees credit reporting agencies to ensure that personal information is collected, maintained and reported in a responsible fashion. The Consumer Reporting Act also ensures that individuals have the right to know what information is being reported in relation to them and who the information is being reported to. If any of the reported information is incorrect, you have the right to have it corrected under this act.
|The extension of money, goods or services with trust that the individual will repay the owed amount in the future. In today’s world, trust of repayment is determined through an assessment of creditworthiness using a credit application.
|A formal application, required by the majority of lending institutions, that gathers information from the applicant for the assessment of creditworthiness. The form will request information such as personal identification, income and expenses, residency, existing debt, and employment.
|A governing body that collects credit information about individuals and sells it to other entities that are in the business of extending credit for a fee. Credit bureaus are also referred to as consumer reporting agencies and credit reporting agencies. In Canada, there are two credit bureaus, TransUnion and Equifax.
|A financial product that allows cardholders to purchase goods and services using credit. The amount spent in a particular period becomes due at a specific date. If the amount is not paid on that date, interest will come into effect. Credit cards are a physical, plastic card.
|When a creditor extends credit to a consumer it comes with a credit limit, this is the maximum amount the consumer can borrow.
|Credit bureaus collect information about your personal finances and rate you to give potential lenders an easy way to assess your creditworthiness at first glance. There is a rating system in place for consistency and to protect from bias. Credit ratings are different from credit scores but are often used interchangeably. Your credit score actually determines what credit rating you’re given. As an example, if you have a credit score of 850, you’d be given a credit rating of “excellent”.
|The act of improving your credit score by removing inaccurate information from your credit report and working on healthy, responsible financial habits.
|A credit report contains information regarding your credit history and includes things such as your credit score, payment history, financial debts, record of debt payment, and any black marks on your credit. Credit reports can be obtained from credit bureaus, such as Equifax and TransUnion.
|A three-digit number that is calculated by credit bureaus using a mathematical rating system and information from your credit report. A credit score falls anywhere between 300 and 900, with 900 being the absolute best. Lenders might have minimum credit score requirements for extending credit which is why it’s important to maintain a healthy credit score.
|Credit Union/Caisses Populaires
|A type of bank that is owned by its members and operates for the benefit of their members. Credit unions are subject to provincial regulation and tend to be small in size and community-oriented. Because of these features, credit unions tend to be a superior way of investing, banking and lending. Credit unions are referred to as Caisses Populaires in Quebec.
|By assessing the historical information associated with a consumers’ finances, creditworthiness is the amount of trust a lender places on a borrower in relation to the repayment of extended credit. Creditworthiness is assessed using a combination of credit report, credit score, credit rating and application information.
|A credit score created by the Fair Isaac Corporation. FICO scores are used by lenders to determine a borrower’s creditworthiness before extending credit. Scores range between 300 to 900.
|Whenever an entity, including yourself, requests a copy of your credit report, an inquiry is recorded. A hard inquiry is a request from a lender or any other individual that is assessing your creditworthiness. A soft inquiry is a request by you to view your own credit report. A large number of hard inquiries can indicate financial struggles to a potential lender.
|A special promotional interest rate offered by credit card issuers for a specific period of time, such as a few months to a year. The goal with these rates is to attract new customers.
|A type of credit agreement that allows customers to borrow against a pre-approved credit line when making purchases. A credit card is the most popular form of revolving credit. The borrower is responsible for paying the borrowed amount plus interest each payment period. Revolving credit is also referred to as open-ended credit or charge account.