The last thing anyone wants is errors on their credit report that can affect their credit rating. By knowing how to identify and handle the situation, you can prevent and stop activities on credit reports that are harmful. Every single day, the two major credit reporting bureaus, TransUnion Canada and Equifax Canada receive gigabytes on top of gigabytes of data about individual consumers from all around the country. Collection agencies, financial institutions, utility companies, retailers, and others furnish information about late payments, unpaid accounts, and on-time payments to the credit bureaus. All of this information is recorded in the consumer’s credit file so it can later be used by others to determine creditworthiness.
With so much data, there is plenty of room for mistakes to be made and for there to be discrepancies in credit profiles. This is why it is important for consumers to review their credit reports once annually. If anything incorrect is noticed, it needs to be inquired about immediately. If there is an error, it needs to be disputed so the correct information can be reported. You should always specify the facts concisely and clearly in writing when there is a problem and keep a record of all disputes and inquiries. That way you can either avoid or address an error. The following are the five most common credit report errors that you will need to look out for:
- Someone Else’s Credit Issue
- Information Is Outdated
- Payment History Mistakes
- Identity Theft
- Clerical Errors
1. Someone Else’s Credit Issue
If two consumers have names that are similar, it is possible for their credit report information to become crossed. For example, Jane Doe in Vancouver could get the blame for a late car payment that is owed by Jane Doe in Toronto. This can be a very frustrating situation. It is also possible for another person’s information to show up on your credit report if both of you are linked to an ex-spouse. In this case, it could be the credit information of your ex-spouse that is getting merged with yours, and that can be problematic.
In one case described by the director of a Canadian credit counseling service, the credit report of a former spouse was linked to a telecommunications account that was in collections. This account was set up after the couple had separated. This resulted in a dispute, which had to be escalated to an ombudsman before the issue could be rectified. Once it was, the credit record of the innocent person was amended. If you find such an error on your credit report, the best place to start is the office of Consumer Affairs. You can notify them of the error and receive instructions from there on what you should do.
2. Information Is Outdated
Most creditors don’t make it a priority to remove a closed credit account from a consumer’s credit profile. An account you had with a department store that was closed three years ago could still show as active. The most serious issue is when pre-bankruptcy debts have yet to be eliminated from the credit report after six or seven years, depending on the reporting laws in your province. In one case, a real estate broker whose bankruptcy was discharged in the early 1990s was being turned down for credit again and again because of the outdated notations in his credit file. It didn’t matter that he met income requirements and was meeting all of his debt obligations, he just couldn’t get the credit he deserved.
The speculation is that written notification was not sent to the credit bureaus that those accounts should have been removed. In this case, the consumer has to make sure that all of the information is provided to the creditor to ensure the credit file can be cleared o those debts.
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3. Payment History Errors and Mistakes
Fully paid amounts can still show up as unpaid on a credit report. Prior payments can also be inaccurately listed. Unfortunately, some of the data falls through the cracks. It can take the credit bureaus between 60 and 90 days to update payment information. Consumers need to be patient when a payment doesn’t show up in their credit file immediately. At the same time, it is important to follow up so that incorrect data can be disputed. Being proactive is very important. Cards like the Plastk Secured Visa Credit Card will let you monitor your credit score anytime, so you can spot errors faster.
4. Identity Theft
There are two types of identity theft when it comes to credit reports. One is when an identity thief creates new accounts and makes charges in the name of the consumer. The other occurs when the thief takes over the existing accounts.
Fraudulent charges can cause serious damage to a credit report and a credit score. Both TransUnion Canada and Equifax Canada offer 24-hour credit profile monitoring. They also offer suspicious activity alerts. However, these services do come with subscription fees. As soon as you notice something suspicious in your credit file or you have other reasons to believe your identity has been stolen, it is important to report your findings to the authorities immediately. Include copies of any police reports when you submit the request to have fraudulent activity removed from your credit file.
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5. Clerical Errors
Wrong addresses, misspellings, and wrong telephone numbers may seem harmless. However, a single keystroke error can result in one debt being listed twice or another error that lowers your credit score. One of the most critical clerical errors is a transposed social insurance number. If a clerical error occurs, then it is best to go to the source. The source is the creditor reporting the information to them. This is the quickest and most decisive way you can get the issue taken care of quickly.
Ways to Check Your Credit Score in Canada
The moment you notice something questionable on your credit report, there are ways you can take care of it. By addressing the situation as soon as possible, you can preserve your credit rating so that you have no issue opening new accounts in the future.