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Your credit report is a key part of many of your personal finance decisions, from getting a credit card to applying for a mortgage.
So, what if you check your credit report and see an error? According to a 2012 CBC report, many Canadians have had errors on their credit reports that affected their ability to get approved for credit.
So if you spot one, how can you get it fixed?
How is my credit report used?
Your credit report is a history of how you’re using and have used credit in the past.
Before making a major purchase such as a home or car, it’s a good idea to check your credit report, as it can affect your ability to be approved for more credit, as well as get hired for a job or rent an apartment.
By checking your credit report on a regular basis, you can spot errors and signs of identity theft.
You can request a copy of your credit report directly from the two main credit reporting agencies in Canada, Equifax and TransUnion. You’re entitled to one free copy of your credit report from each credit reporting agency once a year.
You can also view your TransUnion credit report for free any time at Credit Karma.
What information can appear on your credit report?
Your credit report may include personal information, including your name, address, employment information, date of birth, telephone number, Social Insurance Number (SIN), driver’s licence and passport number.
It also contains credit history information, including:
- Open credit accounts. This can include the date you opened the account, how much you owe, your payment history, if you’ve made the payments on time and if you’ve gone over your credit limit.
- Telecommunications accounts. This can include your internet and mobile phone accounts.
- Credit inquiries. Hard inquiries, which can occur when you apply for a credit product, can stay on your report for one to six years.
- Accounts in collections. When a lender has made several unsuccessful attempts to collect debt, it may send your debt to a collection agency to attempt to recover the funds owing.
- Public records. This can include bankruptcies and legal judgments against you.
If you fail to make payments on credit such as a car loan or mortgage and the lender takes actions to seize the assets, those may appear as well.
How frequently do errors occur on credit reports in Canada?
Although TransUnion wasn’t able to provide specific statistics on the number of errors typically found on credit reports, they say errors are relatively infrequent.
“In comparison to the total number of credit-active individuals in Canada, we see relatively few file disputes per year,” says David Blumberg, public relations director of TransUnion.
He adds that commonly disputed items on credit reports “tend to relate to payment information or updates related to debt repayment programs, such as bankruptcy and credit counselling.”
Other errors can include personal information errors (for example, your name could be spelled incorrectly or inaccurate addresses are listed for you) and signs of identity theft and fraud (for example, accounts that have been opened in your name that you didn’t authorize).
What can’t be changed?
While you may be able to fix some errors on your credit report, some information can’t be changed.
Any information that is factual and accurate can’t be changed. For example, if you paid your car loan or credit card late, even if you paid off the amount owing or closed the account, the negative mark will still remain on your credit report for six or seven years, depending on the type of information and the province or territory where you live.
It can take a while for some negative information to fall off your credit report. The amount of time it takes to disappear depends on what type of information it is and the province or territory where you reside.
For the majority of negative information, it will appear for at most six or seven years on your credit report.
Watch out for firms that claim they can get rid of negative information from your credit report sooner than the six or seven years. These companies often charge a fee for their services and generally, it’s not possible for them to remove negative information before its expiry date.
How do you file a dispute with the credit reporting agencies?
If you find any errors on your credit report, you can file a dispute with the credit reporting agencies to get them corrected.
“Consumers have the right to dispute any information reported on their file. This could include anything from addresses and phone numbers to account information and judgments,” Blumberg says.
Disputing errors on your credit report is free. Before filing a dispute, make sure you gather all your supporting documentation, such as receipts, statements and anything else you can use to prove your case.
Once you’re ready to file your dispute, contact the credit reporting agencies that are reporting the error. Equifax and TransUnion both have forms you can complete for correcting errors and updating your personal information.
Before the agencies will make any changes to your credit report, they’ll verify your dispute with the lender. If the lender confirms there’s an error, the credit reporting agency reporting the error will update your credit report.
However, if the bureaus disagree with your dispute, they may not update your report. For example, you could claim you have fully repaid your credit card balance, while it shows as unpaid with your lender. In this case, the bureau may require additional information or deny your request for change.
If you spot an error on your credit report, it’s important to file a dispute right away to get it corrected, especially if it could be affecting your scores.
Errors can occur in personal information and credit history information. Take the steps needed to correct this information before applying for credit like a mortgage or car loan.