When it comes to the health of your credit, one of the most important things to do is make sure your credit report is up to date and error-free. 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 application being denied, especially if you aren’t aware of it and the information is wrong. To learn more about how credit report errors can affect your credit and how to get inaccurate information removed, keep reading.
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.
If you apply for new credit, let’s say a loan, your potential lender might inspect your credit report because it can tell them how you’ve handled your previous or existing products. Sadly, many credit users don’t even know how to check their reports or recognize the inaccuracies when they see them. In fact, a study by the Public Interest Advocacy Centre (PIAC) shows:
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.
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:
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:
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:
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 debts on time.
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:
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.
You can initiate a dispute with TransUnion online, by phone or by mail.
TransUnion Consumer Relations Department (for English service)
P.O. Box 338, LCD1
Hamilton, Ontario
L8L 7W2
OR
TransUnion Centre de relations au consommateur (for French service)
CP 1433 Succ. St-Martin
Laval, QC, H7V 3P7
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.
Equifax Canada Co.
Consumer Relations Department
Box 190 Jean Talon Station
Montreal, Quebec
H1S 2Z2
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:
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. If you’ve been a good client until that point and assure them no more payments will be missed, they may agree, then report the new information to whichever bureau(s) they work with.
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.
In reality, no one except the credit bureaus, not even a professional advisor, can get something immediately removed from your credit report, unless it’s a lender or collection agency reporting new information.
So, if a “professional” tells you they can have your negative information wiped clean for a price, it’s better to walk away, as they are likely trying to scam you. No legitimate operation will ever claim that they can magically make your credit blemishes disappear.
That said, there are some financial agencies that can help you rebuild your credit using easy-to-manage credit products, such as small loans or 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.
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.
Removing An Error On Your Credit Report FAQs
What is a consumer statement?
If the credit bureau is able to unable verify the information that you’ve disputed, you are legally allowed to add a consumer statement to your credit report to explain your situation. This consumer statement is a short 800-character note that can be attached to the item that you disputed. Any future organizations that pull your credit report will be able to read this consumer statement. It will remain on your credit report for 6 years, but you may request that it be removed at any time.What happens when you file a dispute with the credit bureaus?
Once you’ve filled out the necessary forms and provided all the information to file a dispute, the credit bureaus will begin the dispute process. They will use the information you’ve provided to verify and double-check the information they have on you. If this does not resolve the issue, they will contact the company that the information has come from. If the company verifies that the information is incorrect, the credit bureau will update your credit report, if not, no changes will be made.Can errors on my credit report affect my credit scores?
Yes, errors on your credit report can affect your credit scores. The information in your credit report is used to calculate your credit scores, so any inaccurate information on it can affect your credit score calculation.
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.
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. A number that represents a business’ creditworthiness based on information within the credit report. The credit bureau calculates and regulates business credit scores. 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. 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. Credit Glossary
Terms
Business Credit Report Business Credit Score Consumer Reporting Act Credit Credit Application Credit Bureau Credit Card Credit Limit Credit Rating Credit Repair Credit Report Credit Score Credit Union/Caisses Populaires Creditworthiness FICO Score Inquiry Introductory Rate Revolving Credit
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Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.
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