Ontario Credit Bureaus and Bankruptcy - Credit Ratings.
NEWS FLASH - Protection for Ontario residents effective January 1, 2008
Credit reporting agencies or credit bureaus, collect information about consumers' financial affairs and sell that information to their business members, such as credit grantors, employers and insurance companies. The credit bureaus charge annual fees as well as a fee for each credit report requested by members.
In Canada, there are three major credit bureaus: Equifax Canada, NCB Inc. and TransUnion Canada.
Most national and international creditors, such as banks and department stores, are registered with all bureaus, so the chances are good that whatever shows up on one credit report will also appear on the others. This makes it simple for you to check your history. You really need to check only one bureau's records.
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The consumer has a right to place a 100 word statement (50 recommended) on the credit bureau file, to be given to anyone who obtains a future report.
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Credit bureaus obtain their information from three major sources:
1. Consumers supply information, primarily from filling out application forms for credit.
2. Public records provide information on such matters as bankruptcies, Court judgments, foreclosures and agreements registered with Provincial authorities.
3. The major credit grantors and collection agencies send their credit files electronically to the credit bureau every month, resulting in files that include the account number, outstanding balance, and a nine point scale indicating whether a payment was made on time or late.
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The Nine Point Credit Rating Scale is as Follows:
R0 Too new to rate; approved but not used.
R1 Pays (or paid) within 30 days of billing; pays account as agreed.
R2 Pays (or paid) in more than 30 days, but not more than 60 days, or one payment past due.
R3 Pays (or paid) in more than 60 days, but not more than 90 days, or two payments past due.
R4 Pays (or paid) in more than 90 days, but not more than 120 days, or three or more payments past due.
R5 Account is at least 120 days overdue, but is not yet rated 9.
R6 (Code 6 does not exist.)
R7 Making regular payments under a consolidation order or similar arrangement.
R8 Repossession (indicate if it is a voluntary return of merchandise by the consumer).
R9 Bad debt; placed for collection; skip.
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The FICO® score, developed by Fair, Isaac (the pioneer in credit scoring) is a number between 300 and 850 that lenders use to determine your credit rating. A FICO® score is a snapshot of your credit rating at a particular point in time. The higher your credit score the more likely you are to be approved for loans and receive favourable rates.
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The Credit Bureau's policy regarding bankruptcy information is:
A first-time bankruptcy stays on your record for six years after the date of your discharge, and a second bankruptcy for 14 years. A proposal stays on record for three years after you've satisfied your proposal.
Credit Reporting Acts Protect the Rights of Consumers:
Reporting Standards
Credit Bureaus share information within a system known as the National Equifax Network. The network observes strict standards governing reporting of adverse information and purging of credit reporting records. The credit bureau must investigate and use its best efforts to confirm disputed negative information. A consumer has a right to full disclosure of the content and the source of any information on his or her file. The Registrar of Credit Reporting Agencies recognizes that all complainants consider their issues to be very serious. For that reason the Credit Reporting Branch insists that credit reporting agencies and creditors provide prompt and complete reports to the consumer about adverse credit information.
- The Act applies only to consumer transactions.
- Reports may be given to a person seeking information only for the purpose of: extending credit or collecting a debt; a tenancy inquiry employment or insurance verification under authority granted by a government statute otherwise, as a direct business requirement.
- Before a person may obtain a report, she or he must: have the consumer's consent in writing, or notify the consumer by mailing a notice postmarked at least three days before obtaining the report.
- If a consumer is denied credit or has an increased cost as a result of information obtained in a credit report, the person must be notified promptly by the person denying credit.
- The consumer has a right to place a 100 word statement (50 recommended) on the credit bureau file, to be given to anyone who obtains a future report.
- A consumer has a right to see the file and has a right to receive a copy of any report.
.A comprehensive explanation from Financial Consumer Agency of Canada
Protection for Ontario residents effective January 1, 2008 (See Bill 152).
Effective January 1, 2008 a consumer will be able to require a consumer reporting agency to include an alert in the consumer’s file warning persons to verify the identity of any person purporting to be the consumer. The consumer reporting agency will be required to give the alert to every person to whom information from the file is disclosed. If a person receives an alert in connection with certain transactions, the person who received the alert will be required to take reasonable steps to verify that the person involved in the transaction is the consumer.
If a consurmer wants this protection he or she is required to advise the credit bureau.
Equifax has advised that if a consumer requests the alert notification they will post the following in the Consumer Statement segment:
**** WARNING ****ALERT TO VERIFY CONSUMER'S IDENTITY - PLEASE CONTACT CONSUMER AT (000) - 000-0000 BEFORE EXTENDING CREDIT
Overview: