A friend asked me about how to proceed with disputing an error on his credit report, so I thought I would share the details on this blog as well.
Believe it or not, errors do happen, and your credit profile may be the victim. This is one reason why I advise people to ensure they are requesting their credit report at least once a year and reading it over.
Do not wait until it is time to process your mortgage or personal loan. You could get a nasty surprise when you learn your credit score has taken a nosedive due to a credit report error.
Errors on Credit Reports and Why They Matter
Your credit report is a snapshot of your financial track record. How you have managed your debts in the past, your open credit facilities, payment history and defaults, bankruptcy (if applicable), and employment history.
When you approach a lender for a new credit card or loan, they may use a combination of your credit report and score to assess your creditworthiness.
The interest rate you pay may also vary based on the assessment of your credit profile by your lender.
An error on your credit report can taint your financial reputation. For example, my friend was looking at applying for a line of credit, only to find out on his credit report that a store credit card he had paid off and closed about 5 months ago was still open and in default. Of course, this led to his credit score also taking a big hit!
Some common errors to watch out for when you review your credit report include:
- Wrong Personal Information: old mailing address, misspelled names, inaccurate date of birth.
- Inaccurate Account Status: such as late payments that were made on time, closed accounts that were left open, debt that has already been paid in full.
- Negative Information staying on your credit report after the maximum number of years allowed by law – late payments, judgements, bankruptcies, consumer proposals, loan defaults, etc.
- Strange accounts opened in your name, such as from fraudulent activities.
Steps to Disputing Errors on Your Credit Report
Thankfully, there is recourse available to you if you find errors on your credit report.
In Canada, credit bureaus are obligated to verify the accuracy of the information on a credit report if you dispute it, and they will do so free of charge. The two main credit bureaus in Canada are Equifax and TransUnion.
Depending on the error, you may be able to simply call your bank (lender), verify there has been a mistake, and have them transmit the updated information to relevant credit reporting agencies.
Alternatively, if you are like me, you can take a two-pronged approach and contact both the bank and credit bureaus at the same time and with the same information.
Step 1: Gather Your Documents
You will need to provide supporting documents to back up your claim. These may include bank account statements, valid personal identification, receipts, and proof of address.
Only send out copies – keep the originals.
Step 2: Contact the Lender
Contact your bank/lender and let them know there has been an error. Provide them with copies of your evidence. You may well be able to solve the problem at this stage.
Step 3: Contact the Credit Bureaus
At the same time you are contacting your bank, consider reaching out to the credit bureaus as well to ensure work is being done. We all know your bank considers you their priority, eh? 😉
Credit reporting agencies are legally obligated to investigate your claim.
- Complete their Investigations Form and mail it to the address indicated
- Call 1-800-663-9980 or 1-877-713-3393 if you have questions
- Complete their Consumer Credit Report Update Form and mail or fax to 514-355-8502
- Call 1-800-465-7166 if you have questions
The credit bureaus will investigate your claim and update your credit report if there is an error. You should generally expect to get a response within 30 days.
At your request, the credit bureaus can also send an updated copy of your credit report to any lender who has recently received a copy.
What If You Are Not Satisfied With the Outcome?
If you are not in agreement with the outcome of your dispute, or maybe feel the need to vent a bit, you have the right to request that the credit bureau add a consumer statement to your credit report. This is an opportunity to tell your side of the story.
Equifax allows an explanatory statement of up to 400 characters. For TransUnion, it is up to 100 words (or 200 words in Saskatchewan). The consumer statement is free of charge and will show up on your credit profile when it is accessed by lenders.
If you are still not fully satisfied with the outcome and want further action, contact your provincial/territorial consumer affairs office.
You are eligible for one free credit report per year – request a copy from both TransUnion and Equifax and review them. There are also many free ways to check your credit score and even get free updates on a monthly basis. I use Borrowell.
Reviewing both your credit report and score not only helps you detect errors on time, but it could also save you from becoming a victim of fraud.