Credit Bureaus and Collection Agencies

Major Credit Bureaus

The Credit Bureau is a clearinghouse for the credit information. Credit grantors provide the credit bureau with factual information on their customers and in return, credit grantors can obtain credit files on consumers who wish to open accounts with them.

There are three credit reporting agencies in Canada: Equifax, Northern Credit Bureau and Trans Union. You can contact these agencies to ensure that the information being reported about your credit is accurate. Under provincial consumer legislation you are entitled to a copy of all the information a credit agency has on you. If you want a copy of your credit report, mail or fax a request with copies of two pieces of identification to the companies. In a couple of weeks, they will mail your report to you. The service is free unless you require an immediate response and are prepared to pay an extra cost.

Equifax Canada
Consumer Relations Department
Box 190 Jean Talon Station
Montreal, Quebec
H1S 2Z2

Tel: ( 514 ) 493-2314
1 800 465-7166
Fax 1-514-355-8502

Trans Union
Consumer Relations
709 Main Street W Suite 3201
Hamilton, On L8S 1A2

Tel: 1 800 663 9980
Fax: ( 905 ) 527-0401 or 1-877-713-3393

OR

#202, 1409 Edmonton Trail NE
Calgary, Alberta T2E 3K8

Phone: (403) 276-7808
Fax: (403) 230-3835

Cost: $15.00

Northern Credit Bureau
336 Rideau Boulevard
Rouyn - Noranda, QC J9X 1P2

Fax: 1 (800) 646-5876

You can dispute errors in your report. Instruction on how to dispute inaccurate information is included in the written credit report you will receive from the bureau.

The credit bureau is obligated to review your complaints, however you must supply all the material they ask for on their forms. The forms, which accompany your personal credit report, explain how to file disputes and get corrections made. It can be a drawn out process, but be persistent.

If the credit bureau won't correct your file, ask them to mark the file "in dispute." You may also exercise your right to have a statement (100 words or less) inserted into your credit report to explain your side of the story to potential creditors.

If you cannot get the agency to make changes, you may want to contact your provincial consumer department.

Your Credit File

A credit file is a record of information about your payment history with credit grantors. Your credit file will include information from the "public record" like bankruptcies, which reflects upon your ability to pay your bills. Credit grantors use your "credit file" to help them decide whether or not to extend credit to you.

Credit information includes, name, address, age, social insurance number, marital status, spouse's names, number of dependants, occupation and employment history. It also contains debt information including any judgments, garnishments or bankruptcies. You must give permission to anyone who wishes to review your credit information however, this is not a big limitation since most credit forms used locally give the creditor authorization to make such enquiries. Often people do not understand what they are signing. When they complete a credit application for new credit cards the new application gives the potential creditor the ability to communicate about your credit history. Please note that it may be possible for you to rescind the authorization that you gave your creditors to release the personal information about your finances.

Information about your friends and personal habits cannot be found in your credit file.

If you ask in writing for the details on your credit report, the credit bureau must disclose all information in its files pertaining to you as of the date of your request. If you note any mistakes on your credit file, you should let the credit bureau know about any changes that need to be made. They will update and correct your file if the creditor who originally provided the information agrees with your statement. You can enter an explanation in the file. The credit bureau can explain your right to dispute information in the file and the way to go about it.

If there is a dispute in the information on the database, the credit bureau can advise you as to your rights. Most information regarding your credit history is on your file for six or seven years (check with the agency). Negative information (such as missing a couple of payments) and positive information (no late payments) will appear on the credit file and may affect future credit, accommodation or employment applications.

Credit Reporting

Credit files are strictly controlled by provincial legislation. Generally, a credit bureau may only provide information in your credit file when the request relates to the extension of credit, collection of a debt, housing rental, an application for employment or insurance, the issuance of a special license, or potential financial dealings that involve you. A person or company is not allowed to obtain a credit file from a credit bureau unless they have obtained your consent or have told you they will be requesting it. Each time someone looks into your credit file, it is noted in the file for future reference. This will be disclosed to you upon request.

Not all credit grantors use the services of credit bureaus. So you may find that some of your accounts are not listed in your credit file. Not every creditor is a member of the credit agencies (example Canada Revenue Agency) and therefore your credit history with that credit grantor may not be reported to the credit bureau.

Any information that reflects on your ability to pay bills is of interest to a potential credit grantor. A credit file is a history and shows the negative along with the positive. Most negative information (bad debts, judgements, or collections) is removed from your credit file after six years.

Credit Rating

It is important to note that your credit is rated by your creditors and not by the individual creditors.

The credit ratings followed are:

R0 Too new to rate; approved but not used.
R1 Pays within 30 days of billing, or pays as agreed.
R2 Pays in more than 30 days but less than 60 or one payment past due.
R3 Pays in more than 60 days but less than 90 or two payments past due.
R4 Pays in more than 90 days but less than 120 or three or more payments past due.
R5 Account is at least 120 days past due but is not yet rated "R9".
(There is no R6)
R7 Paid through a consolidation order, consumer proposal or credit counseling debt management program.
R8 Repossession.
R9 Bad debt or placed for collection or bankruptcy

Effect of Bankruptcy and Proposals on your Credit Rating at the Credit Bureau

Proposals are usually reported as R7 however sometime creditors report a proposal as a R8 or R9 because the creditors consider a proposal to be a Bankruptcy Proposal and classify the proposal debtors rating as a R9. There is really not a significant difference from being classified as a R8 rather than as a R9. Both ratings are quite bad.

Bankruptcy information on the first assignment is reported for six or seven years after the date of the discharge, not the date of filing the bankruptcy. Proposal information is reported for four years after the date that the proposal was completed.

A second or subsequent bankruptcy is reported for 7 years for each bankruptcy, example, a total of 14 years for two bankruptcies. We do not know if the extended negative reporting is much of a punishment since old news is usually disregarded. People who have had a second or third bankruptcy have to invest the time and effort to develop a relationship with a financial institution who appreciates their business.

Rebuilding Your Credit AFTER BANKRUPTCY OR A PROPOSAL

The first step in rebuilding is to monitor your credit bureau reports to make sure that your debts and the status of your bankruptcy are reported properly. It is not unusual for your creditors to report your old debts as new debts. Someone looking at your credit bureau could get the incorrect impression that you are getting into financial difficulties right after your release from bankruptcy. If you notice a mistake, you will have to write the credit bureau to get the mistake corrected.

The second step is to avoid credit as long as possible. Credit is not cash and credit is not income. The longer that you get by without credit, the less your reliance on credit will be. You should know that creditors report credit applications on the bureau. The credit applications following a bankruptcy or proposal do not look good on your credit history. Even getting a guaranteed credit card may not a good idea if it results in you becoming dependent on credit again. The best way to get credit is not to need credit.

The third step is to apply some of the cash management tools that you learned from your trustee. If you made regular payments while you were bankrupt or under a proposal, you can save that amount. If you made extra payments to the trustee while you were bankrupt, you can save that amount. If you are paid more than twice a month, you will receive extra paydays during the year – a person paid every two weeks has three pay cheques two out of twelve months. If that person can live on two cheques ten months of a year, why can’t they live on two cheques and save one cheque on the months that they receive three cheques?

Keep your banking and payment history clean. Having a place to bank is a privilege and you can loose it by bouncing cheques. Negative credit reports look very bad following an assignment or a proposal.

Develop some kind of savings plan. Your savings could be an emergency cushion should you lose your job or have a unplanned cash requirement. It is great to be independent of credit.

Consider starting a RRSP at your bank with part of the savings. The best way to convince a banker that you are ready for credit is not to need it!

Don’t darken the doorways of payday loan companies or high interest rate loan companies. There should be nothing that you need so bad that you are prepared to compromise your financial freedom for by accepting credit with unreasonable interest and repayment terms.

Don’t fall for the line that you can improve your credit by getting more credit. Finance companies that report that you are making regular payments on their high priced loans maybe only advising your creditors that you have fallen into the credit trap again and you are not managing your affairs reasonably.

Collection Agencies

Collection agencies are also largely unregulated and like credit bureaus are covered under provincial law. The following are general collection rules:

• contact may be made between 7:00 a.m. to 9:00 p.m.;
• a phone call may be made to your place of employment to confirm that the debtor works at that place;
• a collector is paid on a commission basis; if the debtor pays, the collector gets paid;
• there should be no contact with other family members unless they have guaranteed the debt or are simply confirming residence of the debtor;
• taking legal action means issuing a "Statement of Claim" (suing) and proceeding to court for judgment which will lead to garnishment of wages and seizing of assets (bank accounts, liens on property);
• collectors may not seize assets without a court order; normally a bailiff or the sheriff will take possession of the asset at this point;
• creditors or collectors may only enter a place of residence with the debtor's permission;
• harassment is not permitted (the definition of harassment is open to interpretation), and a debtor has the ability to lodge a complaint against a collection agent if they feel they are being unduly harassed.