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.
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 6 months. For instance, if you get your free Equifax report every January, get your free TransUnion report in every June.
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.
How do Equifax and TransUnion obtain their information?
Lenders provide Equifax and TransUnion with the details of the debts held with them. This 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.
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 happens if there is an error on my credit report?
While both Equifax and TransUnion have a dispute resolution process, the perceived lack of control that a person has over his or her own 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 information is wrong.
What should you be double-checking?
Read through your report for these common mistakes:
- Incorrect name, address, birth date, phone number and other personal information than 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.
- Review your list of accounts, balances, payment history and account status. Look for incorrect statements of missed or late payments.
- 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.
- Review the list of credit inquiries and ensure you authorized each lender to access your credit report. Unauthorized inquiries could be a sign of possible credit fraud.
Remove the errors by following these steps:
1. Gather your paperwork
Gather documents to support your position. 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
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.
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.
3. Contact the lender
If the mistake originated with your lender when the 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. If there are errors, Equifax and TransUnion will fix them. Negative information stays on your record for a certain period of time and paying a fee will not remove the negative information early.
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.