Credit FAQs

Frequently Asked Questions About Credit

Credit can be intimidating. That's because your credit standing can have a big influence on your ability to get a loan — and a mortgage. Plus, having 'good credit' opens up more savings and options to help you reach your financial goals.

Read through the questions and answers below about your credit file. Once you dive in to understand how it works, you'll see that there's a lot in your control, and you can put in place effective credit habits or take action to improve or repair your credit.

Have more questions or are you a first-time home buyer? Check out our Credit 101 page for more details about your credit score. Or talk to one of our highly trained, expert mortgage brokers — they've been doing this mortgage-thing for quite a while, and are always here at your service.

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What exactly is a credit file?

Why is my credit file important?

What information does a Consumer Credit Report contain?

How is credit information gathered and who keeps it?

How can I get a copy of my credit report?

Can I get my credit report online?

Who can access my credit file?

Why is some information on my credit file outdated?

How can I make sure my credit file information is accurate?

How can I correct an inaccuracy in my Equifax credit file?

What if I am still not satisfied with an item in my credit file?

How long does Equifax keep information in my credit file?

Why do we need credit reporting?

What is a credit rating?

Does my credit file tell me how I will be rated?

What is a credit 'inquiry'?

How can I protect my identity?

What can I do if I suspect I am a victim of identity fraud?

What exactly is a credit file?

Your credit file is created when you first borrow money or apply for credit. On a regular basis, companies that lend money or issue credit cards to you (including banks, finance companies, credit unions, and retailers) send specific factual information related to the financial transactions they have with you to credit reporting agencies (also called credit bureaus).

There are two credit bureaus in Canada, Equifax Canada and TransUnion. They collect, organize and store this information so that it can be accessed by you and financial institutions or companies that offer lending services.

Your credit file contains all the information received from companies that have extended credit to you AND that report to a credit bureau (not all companies report to a credit bureau, for various reasons including privacy).

For example, it might include a listing of your credit cards or lines of credit, along with a history of whether or not you have paid on time. If you have declared bankruptcy, that fact will appear. If you did not pay a bill and your account was sent to a collection agency, that will also show on your credit file. In summary, your credit file is a report of your financial history and performance with credit grantors.

Why is my credit file important?

When you apply for credit or want to open an account, the credit grantor wants to be sure that if they lend you money, they will be paid back. The more your credit file demonstrates that you pay your debts on time, the more desirable you become as a potential customer, which is reflected in your credit score.

If you have fallen behind in the past, a credit grantor wants to see how you have been managing your debt since then. Your credit file also shows how much you have already borrowed. Credit grantors want to evaluate your financial capacity to make monthly payments. No responsible lender will want to over-lend or encourage customers to take on more debt than they can pay back.

What information does a Consumer Credit Report contain?

Here is a general overview of the different sections in a consumer credit report.

1. Personal Identification
   Contains key identification information, such as your name, address, birth date and Social Insurance Number (SIN).
2. Inquiries
   Lists all individuals or organizations that have requested a copy of your credit file in the past three years.
3. Public Record Information
   Contains information about secured loans, bankruptcies and/or judgments.
4. Third-Party Collection Agency
   Contains information about any involvement with a collection agency trying to settle a debt.
5. Trade Information
   Provides details of your credit transactions and shows whether payments are being made. Each of these 'trade' items are evaluated by the credit grantor. The evaluations are based on industry standard ratings, the most common of which use a range from R0 to R9. R0 indicates you are too new to rate; R1 indicates that you pay within 30 days of billing or as agreed; R9 indicates a bad debt, collection or bankruptcy.
6. Consumer Statement
   This is where you can add a brief comment about any information in your file. For example, if you have an R9 rating, you may want to explain that you suffered a setback due to illness, temporary unemployment or other extenuating circumstances.

How is this information gathered and who keeps it?

Credit information is gathered by credit reporting agencies, also called credit bureaus. There are two major credit bureaus in Canada: Equifax Canada and TransUnion of Canada.

Governed by provincial and federal laws, they store and maintain credit information about individual Canadians for use by 'members' of credit bureaus. These members include banks, financing companies, auto leasing companies, credit card companies, and retailers.

Credit grantors update individual credit files regularly by providing information to credit bureaus about their customers' credit and payment activities. This ensures that credit files remain up-to-date and as complete as possible.

Other sources of the information contained in your credit report can include collection agencies and public records from courthouses across the country.

Whether you make or miss a payment, this fact will be added to your file. When you give permission to a credit grantor to look at your credit file, this history is available for them to review.

Years ago, the gathering and storing of credit information was done manually — credit bureau employees created actual paper files and updated them one at a time. Now, credit grantors send data in electronic form to a highly efficient and secure computer environment.

How can I get a copy of my credit report?

Both credit bureaus in Canada, Equifax and TransUnion, are legally required to allow you to check your score and report for free.

You can request it online through their websites, or if a manual process is preferred, you can download a copy of the Equifax request form, or go to consumer.equifax.ca, or you can call Equifax Canada: 1-800-465-7166, or TransUnion of Canada: 1-800-663-9980.

Once you have placed your request, the credit bureau will then allow access to it online or will mail your report to you. It is recommended that you get your report from both agencies to ensure accuracy. If you are willing to pay for a subscription or app, you can get access to your credit score and a copy of your credit report instantly, as well as notifications about any activity on your credit file — which can help alert you to potential identity theft.

Can I get my credit report online?

Both credit bureaus in Canada, Equifax and TransUnion, are legally required to allow you to check your score and report for free, which can be done online from their websites. You'll need to provide personal information so that they can verify your identity to deliver your credit report.

Who can access my credit file?

Equifax is the largest credit bureau in Canada and receives over 40 million requests for file information each year. TransUnion is another credit bureau, and they don't communicate with each other for your credit details.

Federal and provincial laws are very specific as to who can review your credit file and for what purpose. An individual or company may only obtain a copy of your credit file with your consent or after informing you that they will be reviewing your file. A company must have a legitimate business reason and a permissible purpose, as stated in government regulations, to obtain your credit file.

When you apply for a loan or credit card, you are usually asked to complete and sign an application form, which usually includes written consent. It gives permission to the credit grantor to check your credit file when you first apply and for as long as the account is open. In addition to your name, an application often asks for your date of birth, your address and a previous address if you've recently moved — all of which helps to locate your credit file at a credit bureau.

Each time a member of the credit bureau requests your file, the request is noted on your file as an 'inquiry.' You can therefore see a complete record of who has requested your credit file, and when.

A credit bureau may only provide a copy of your file when the request relates to the extension of credit, collection of a debt, housing rental, application for employment or for insurance purposes. Since your credit file contains only factual information, it is important to remember that each of the companies requesting your credit file will interpret those facts in its own way to arrive at a decision.

Of course, you also have the right to obtain a copy of your credit report.

Why is some information on my credit file outdated?

Employment
Employment information is reported from applications for credit and therefore is not updated regularly.

Balance
This reflects your balance on the date the submitter last reported the information. Many credit grantors supply information on a monthly basis, so the balance shown may not be your current balance.

Old account still reported
A credit file is a history of your payment habits. All accounts, paid or unpaid, remain on your file for six years from the date of last activity.

Duplicate accounts
There may appear to be duplicate accounts reported in your credit file. This needs to be examined carefully, because some credit grantors issue new account numbers with every loan renewal. Also, when you report a credit card as lost or stolen, your credit grantor will issue a new card with a new number, resulting in a new item on your file.

Accounts included in bankruptcy still show up in the credit file
All items included in bankruptcy remain on file for six years from the date of last activity.

How can I make sure my credit file information is accurate?

Request a copy of your credit file. If you check your credit file periodically, especially before making any major purchases or applying for credit, you can make sure there are no surprises ahead. If you believe your file contains an inaccuracy, you can take steps to correct it. Simply provide information about the disputed item to the credit bureau (you may need to contact both Equifax and TransUnion to make the correction).

If you find unfavourable, but accurate facts in your file, you may be able to prevent a potentially embarrassing situation by discussing this with the lender when you fill out an application. You can also initiate immediate action to re-establish good credit. You might consider adding a short qualifying statement to your credit file to explain the circumstances surrounding the negative information in your file.

How can I correct an inaccuracy in my Equifax credit file?

For Equifax, you first will need to complete a Consumer Credit Report Update Form. Once complete, you can then begin to address the inaccuracy by contacting Equifax.

Call them at 1-800-465-7166, between 8:00am and 5:00pm ET.

Write to them at:
Equifax Canada Co.
National Consumer Relations
Box 190
Montreal, Quebec
H1S 2Z2

Submit an online dispute with Equifax Canada here.

After they receive your call, letter or online submission, they will begin the Dispute Resolution process.

First, they review and consider the information you have sent regarding the dispute. If this initial review does not resolve the problem, they will continue the investigation. This involves contacting the submitter of the disputed information on your behalf to review the details. The submitter will investigate and report their conclusions back to Equifax. Based on their findings, there may be a change to your credit file. If the disputed information is correct, changes will not be made.

Equifax will send you a revised credit report if changes are made as a result of the Dispute Resolution process.

They will also send your revised credit file to any company that requested your credit file 60 days prior to the change. In some cases, it may be a period longer than 60 days.

For TransUnion, visit their website page for more information on how to dispute an item.

What if I am still not satisfied with an item in my credit file?

If you still do not agree with an item after it has been verified with the submitter, you can send Equifax a brief statement explaining that you disagree. The statement will be added to your credit file and it will be shown every time your credit file is reviewed.

If you have added a comment, you have the right to ask for your revised credit file to be sent to any company that requested your credit file 60 days prior to the change.

Important Note: You do not need to pay a third party to obtain, discuss, review, or make changes to your credit report. You have the right to access your information and make changes to your file if there is an inaccuracy or if you want to include a comment.

It is impossible for a third party to make changes to your file if the facts have been correctly reported. There are individuals and companies that claim they can fix a bad credit file, which is not true. If a file includes accurate, yet negative information about your credit history, this information cannot be changed. Information will only be changed if your file contains an inaccuracy.

How long does Equifax keep information in my credit file?

Credit inquiries to the file: An inquiry made by a Creditor will automatically purge three (3) years from the date of the inquiry. The system will keep a minimum of five (5) inquiries.

Credit history and banking information: A credit transaction will automatically purge from the system six (6) years from the date of last activity.

Note: All banking information (checking or saving accounts) will automatically purge from the system six (6) years from the date of registration.

Voluntary deposits for Orderly Payment of Debts (OPD), credit counselling: When voluntary deposits for OPDs and credit counselling are paid, they will automatically purge from the system three (3) years from the date paid.

Registered Consumer Proposal: When a registered consumer proposal is paid, it will automatically purge three (3) years from the date paid.

Bankruptcy: A bankruptcy automatically purges six or seven (6 or 7) years from the date of discharge in the case of a single bankruptcy (depending on credit bureau). If the consumer declares several bankruptcies, the system will keep each bankruptcy for fourteen (14) years from the date of each discharge (according to Equifax). All accounts included in a bankruptcy remain on file indicating 'included in bankruptcy' and will purge six (or seven) years from the date of last activity.

Judgements, seizure of movable/immovable property, garnishment of wages: The above will automatically purge from the system seven (7) years from the date filed.

Collection Accounts: A collection account under public records will automatically purge from the system seven (7) years from the date of last activity.

Secured Loans: A secured loan will automatically purge from the system seven (7) years from the date filed.

*Exception: P.E.I. Public Records: seven (7) to ten (10) years.

Why do we need credit reporting?

Every day, Canadians purchase goods or services using credit. Credit, when paid back in a regular fashion, can help individuals obtain goods and services — or a home — by allowing more time to completely pay for something in full. In turn, credit reporting allows financial institutions and lending companies to make those decisions to extend credit while protecting their own finances.

Credit reporting allows regulatory collection and supervision of the credit system to ensure fairness of execution.

What is a credit rating?

Every piece of credit history information in your credit file is assigned a rating by the credit grantor.

The most common ratings are 'R' ratings. These are known as North American Standard Account Ratings and are the most frequently used. The 'R' indicates that the item being described involves revolving credit.

If you always pay on time, it will be coded as R1. If an amount was written off because you never paid it back, it is coded as R9. The R ratings are a coding system that translates as 'on time,' 'one month late,' 'two months late,' etc., into two-digit codes.

Ratings are outlined as follows (subject to change):
R0 - Too new to rate; approved but not used.
R1 - Pays (or paid) within 30 days of payment due date or not over one payment past due.
R2 - Pays (or paid) in more than 30 days from payment due date, but not more than 60 days, or not more than two payments past due.
R3 - Pays (or paid) in more than 60 days from payment due date, but not more than 90 days, or not more than three payments past due.
R4 - Pays (or paid) in more than 90 days from payment due date, but not more than 120 days, or four payments past due.
R5 - Account is at least 120 days overdue, but is not yet rated '9.'
R7 - Making regular payments through a special arrangement to settle your debts.
R8 - Repossession (voluntary or involuntary return of merchandise).
R9 - Bad debt; placed for collection; moved without giving a new address.

Other rating indicators that can be found on a report are 'I' for Instalment Credit or 'O' for Open Credit Line.

Does my credit file tell me how I will be rated?

Your file will not tell you how an individual credit grantor will evaluate you as a potential customer. Each credit grantor has its own policies for making decisions about individual customers.

What is a credit 'inquiry'?

An 'inquiry' on your file shows the name of the company or individual who has requested your credit file. Each inquiry is listed on the credit file so that you know who has obtained a copy of it.

In addition to checking your file when you first apply for credit, credit grantors typically request regular updates of your credit file after an account has been opened, when it is being renewed, or for limit increases. These are listed as 'update' inquiries in a separate section of your credit file. They are for your information only and are not displayed to other credit grantors.

How can I protect my identity?

Identity fraud is on the rise in Canada, and it can happen to anyone. It can happen to you. You can take steps to limit your vulnerability to identity fraud, which is the best method of protecting yourself and safeguarding your credit file.

We've put together some tips to help you avoid becoming a victim of identity fraud:

Limit the potential for fraud while using a credit card.

1. When your credit cards are lost or stolen:

• Keep a list of the names, account numbers and the expiration dates of your cards in a safe place. This will aid you when alerting your credit grantors about a lost or stolen card.
• Call your credit grantors immediately upon discovering your cards are missing. Most have 24-hour, toll-free numbers for this purpose. If you re-open the account, ensure they have your correct address.

2. When using your credit cards:

• Carry only the identification and credit cards you need when travelling, whether locally or out of town.
• If your chequebook is lost or stolen, call your bank. Inform them of the cheque numbers missing.
• Sign your credit cards in permanent ink as soon as you receive them.
• When making a purchase, keep your card in view at all times. Retrieve it as soon as the transaction is completed and make sure it is your card.
• Do not sign a blank charge slip.
• Always save your receipts, and never leave them behind. Avoid saying your account number aloud if others can hear.
• Only provide your ID and credit card information over the phone to reputable companies where you have initiated the call.
• If you receive a call from someone claiming to represent your credit card issuer and the caller asks for your account number, do not provide it. If the caller is employed by the issuer, they will know your number.

3. How to manage your credit card statements:

• Check your statement or account regularly to ensure the charges are correct.
• Keep paper statements in a safe place. They contain sensitive information.
• Before discarding old statements, even of closed accounts, shred them.

If your Social Insurance Card is missing: Contact your employer or your local Human Resources Development Canada (HRDC) office immediately.

If your Driver's License is missing: Contact your local driver and vehicle license issuing office. You should also report it to your local police.

Limit the potential for fraud when using ATMs and PINs.

• Shield your numbers while using the ATM.
• Never leave your receipts behind.
• Choose a PIN that is unique. Use a number other than your birthday, Social Insurance Number or other obvious number.
• Never write down your PIN in your chequebook or on your cards. It's best to memorize it.

Limit the potential for fraud when using mail service.

• If your mail stops arriving, check with Canada Post. Sometimes a change of address is submitted by a fraud perpetrator in an attempt to get your mail or steal your identity.
• If you apply for a new credit card and it does not arrive, contact the issuer immediately.

What can I do if I suspect I am a victim of identity fraud?

If you have lost or had your personal identification stolen, or if an institution has contacted you regarding suspected fraud activity, please call Equifax and TransUnion. They will add a statement to your file to alert credit grantors that you may be a victim of fraudulent activity.

This may mean that the next time you apply for credit, you may be questioned more thoroughly. The credit grantor wants to make sure that you are, in fact, the person you say you are, as a result of the 'fraud alert' placed on your file.

Have more credit questions, or want to know your best mortgage rate?

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Please note: The above details are subject to change and are not intended to replace professional advice based on your situation.