Debt Relief Experts
It is a good idea to check your credit report every year. It is not uncommon for there to be mistakes and omissions on your credit report, and these errors can cost you by increasing your interest rate and can even impair your ability to qualify for a loan. By checking your report at least once a year, you can take action to have these mistakes corrected.
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Why is it necessary to get a copy of your credit report?
Lending institutions such as banks use the information on your credit report to determine if you qualify for loans and at what interest rate. Inaccurate information can affect your ability to obtain credit or the interest rate that you are charged. Checking your credit report can also alert you to any identity theft that has taken place.
In Canada, there are two credit reporting agencies: Equifax and TransUnion. They each allow you to get one free credit report by mail every year. To ensure that the information is accurate, we recommend you alternate between the two agencies every six months. For instance, if you get your free Equifax credit report every January, get your free TransUnion credit report in every June.
Here is some information on how to get a free copy of your credit report directly from the credit bureaus.
How do Equifax and TransUnion obtain their information?
There are 2 credit reporting agencies in Canada: Equifax and TransUnion. Lenders submit information to each credit bureau with details regarding the debts you owe. Credit reporting companies like Borrrowell, Mogo or Credit Karma get their information from either Equifax or TransUnion. Experian is a US credit reporting agency and does not operate in Canada.
Credit reporting includes the debtor’s contact information, the balance on the account, and payment history, including any late payments. Mistakes can occur when lenders send incorrect information or on data entry.
No two credit reports will be the same. Lenders choose who to report to. Some report to one reporting agency, some both, some none.
If you have filed a consumer proposal or bankruptcy, the Office of the Superintendent of Bankruptcy will send the credit bureaus the date you filed, the name of your licensed insolvency trustee, and if you have been discharged. Your trustee does not and cannot provide your bankruptcy or consumer proposal information to Equifax and TransUnion.
What types of credit reporting errors are most common?
Your credit report is broken into four sections:
- Personal information
- Credit account and banking information
- Public records
- Credit inquires
Look at each of these sections separately for areas where your credit report may be wrong.
In the personal information, watch for incorrect spellings of your name and any wrong address, employment history, birth date, social insurance number etc. Personal information errors can mean your lender can’t identify the correct credit report when you apply for a loan or when they report information to the credit bureau.
Next, review the list of credit accounts and your credit history. This is where banks and credit providers make a lot of reporting mistakes. A credit report error can significantly affect your credit score.
In addition to errors in your personal information, look for the following in your credit file:
- duplicate accounts,
- fraudulent accounts,
- incorrect balances,
- incorrect notices of late payment and dates of last payment
- closed accounts still marked as open
- negative information reported incorrectly
- negative information not removed after the retention period has passed.
Creditors do not always report information the way they should, especially negative information. Credit reporting includes a code to indicate both the type of loan and payment status.
For account type, you will see four options: I for an installment loan, O for open (e.g. your cell phone bill), R for revolving credit (e.g. a credit card) and M for a mortgage. Each account will also have a payment status code:
1 – You pay your loan on time.
2 – Your payments are 30 days late.
3 – Your payments are 60 days late.
4 – Your payments are 90 days late.
5 – Your payments are 120 days late.
6 – Seldom used.
7 – You are in a consumer proposal, consolidation order, or debt management plan
8 – A secured creditor has taken steps to regain what they have loaned you (e.g. repossessed your car or home).
9 – A bad debt placed for collection or considered uncollectible, or you are bankrupt.
What if I filed a bankruptcy or proposal?
A bankruptcy or consumer proposal provides a stay of proceedings that freezes future creditor actions. Your accounts should effectively ‘freeze’ on your credit report at the date of filing and appear as either included in your bankruptcy or included in your proposal.
If you have filed insolvency, the notice will appear under the public records section of your credit report. Ensure that the date of filing and completion or discharge date is accurate. If a creditor has marked an account as in bankruptcy (R9) rather than in a proposal (R7), ask the credit bureau to update the account once your proposal is completed.
Other common errors we have seen creditors make in a bankruptcy or consumer proposal:
- continuing to report late payments after the bankruptcy or consumer proposal is filed
- accounts reported as sent to collections after a bankruptcy or consumer proposal is filed
- an incorrect narrative description regarding the procedure filed or other activity
- duplicate public records
- reporting a secured debt (for example, a car loan) as included in bankruptcy when it was not
- not removing a judgement
All of these can be fixed through dispute resolution, although credit bureaus often wish to wait until you are discharged or complete your proposal to make changes.
Dispute or fix credit report errors by following these steps
Doug: ‘In previous Lesson’s we learned that your credit score depends on having a good credit history. But you’re starting in a bad place if things are recorded wrong. Many people think that as your Trustee, I report information directly to the credit bureau’s – that’s not true. For privacy reasons I don’t have a direct link to Equifax and TransUnion. Credit bureaus get the details on your bankruptcy or consumer proposal directly from the government and they get your debt information from your creditors, the people you owe money too. You might think you can contact your creditors to have your information corrected, and that may work but that doesn’t always work. It’s up to you to dispute errors with each credit bureau.
The process is simple, but tedious. First you need to find the dispute resolution page on their websites. I’ve added links for each credit bureau in the information section below and on our website at hoyes.com, but a simple web search will find them as well. TransUnion allows you to submit a dispute online, by mail or by phone. At the time of this recording, Equifax only has an online and mail option. Once you’ve located the form you’ll need to collect documentation to verify your identity and to prove that a mistake has been made. To confirm personal information, they may ask for a valid driver’s license, birth certificate or a copy of a utility bill. To prove a payment date, you may need a current account statement or a release letter from your creditor or collection agency. If you’re correcting information about a bankruptcy or consumer proposal, you’ll need to send a copy of your certificate of discharge or certificate of completion or full performance. Filing a dispute is free, you don’t have to pay a fee to file a dispute. You can dispute as often as you’d like, and you can re-submit additional documents if the credit bureau does not accept your position. Keep track of what you’ve submitted. I recommend you write down what items you disputed, what you want corrected and that you keep copies of everything you send to the reporting agents.
Once you receive confirmation that your dispute has been accepted, wait 30 days and then get another copy of your credit report, if the credit bureau didn’t already send you one, check that the information is now correct. If not, file another dispute, perhaps this time with more documentation. It’s important to fix errors early if you’re planning to apply for credit, since the dispute resolution process can take anywhere from 20 business days to 3 or 4 months. I generally recommend you wait to apply for credit until all corrections have been made. Once things are correct, review your credit report at least once a year for new or recurring mistakes.
While both Equifax and TransUnion have a dispute resolution process, the perceived lack of control that a person has over their credit report can be frustrating. A creditor or agency can place incorrect information on your credit report, but it is up to you to prove to the credit bureaus that the data is wrong.
If you spot something on your credit report that you suspect to be erroneous, you should contact the credit bureau directly to begin the dispute process.
Filing a dispute is free. You can dispute as often as you like and can resubmit additional documents if the credit bureau does not accept your position.
Keep track of what you submitted. Write down what items you disputed, what you want to be corrected, and keep copies of everything you sent to the reporting agency.
It is important to fix errors early if you are planning to apply for credit since the dispute resolution process can take anywhere from 20 business days to 3 or 4 months. I generally recommend you wait to apply for credit until all corrections have been made.
Once you receive confirmation that your dispute has been accepted, wait 30 days, then get another copy of your credit report if the credit bureau didn’t already send you one. Check that the information is now correct. If not, file another dispute, perhaps with more documentation.
1. Gather your paperwork
Gather documents to support your position.
To confirm personal information, the credit bureau may ask for a valid driver’s license, birth certificate or a copy of a utility bill.
To prove a payment date, you may need a current account statement or a release letter from your creditor or collection agency. If you are correcting information about a bankruptcy or consumer proposal, you will need to send a copy of your discharge or certificate of completion or full performance.
If your credit report lists an overdue credit card, but the balance owing is zero, send Equifax and TransUnion a copy of the credit card bill showing the zero balance.
If the credit report notice period has expired after completion of your proposal or bankruptcy and the information has not been removed from your credit report, obtain a copy of your certificate of completion or discharge papers from your licensed insolvency trustee.
2. Contact Equifax and TransUnion with their dispute resolution form
If you have obtained a copy of your credit report, the last page usually contains the dispute resolution form that you need to complete and forward to the credit bureau along with any documentation. The forms can also be found online here: Equifax dispute resolution and TransUnion dispute resolution. While you can send a dispute letter to either reporting agency, it is better to use their formal credit dispute process.
We recommend you mail a copy of your dispute resolution and keep copies of all information for your own records until you have confirmed the report has been corrected.
It may take a month or two for the credit bureau to confirm your information. If they can verify the information you provided with the lender, they will correct the error. You should check your credit report once again after this period to ensure that all errors have been corrected.
Here’s an additional tip: Remember to attach a note to the dispute resolution form requesting a written reply for your records and keep a copy of the updated credit reports and all documentation, including any insolvency documents, in a safe place for future reference. You’ll want to make sure you have documented the necessary paper trail in case of any issues with a future credit application.
3. Contact the lender
If the mistake originated with your lender when they reported to the credit bureau, contact them and ask them to update their file. This is important to avoid having the same mistake forwarded to the credit bureau a second time.
Make sure to get proof that they updated their information. If you are still not satisfied with the results, you can file a complaint with the Ministry of Government and Consumer Services.
4. Avoid credit repair services
Also, be wary of companies that offer to remove negative information from your credit report for a fee. Negative information stays on your record for a certain period of time, and paying a fee will not remove the negative information early. Errors can be fixed if you follow the above process.
You should also carefully read the fine print on any company or loan product that offers a quick fix credit repair. Many of these programs or credit repair loans do not work as advertised, and you can easily repair your credit on your own without these services at a much lower cost to you.
Do you need to update records with both credit bureaus?
It very much depends on what the lenders have reported to the bureaus. If there is an error in one report, then it is very likely to also be present in the other. As you can only request one free credit report per year from each bureau, you might benefit from ordering a credit report from just one agency, followed by one from the other six months later. Errors in your credit report can take up to four months to be updated, so this method is also a good way of checking that the mistake has been corrected without you having to pay for a new credit report.
