Negative Credit Report Ratings

Inaccuracies in credit reporting affect millions of Canadians each year. In 2013, the statistics Canada released a study finding that 20% of consumers have errors on their credit reports. The impact from these errors to consumers caused many to pay higher interest rates for things like car loans or insurance. So how many people could this be impacting? There are three large credit bureaus – TransUnion, Equifax. Between the big two, it is said they have files on more than 10 million people in the Canada. Based on the report, there could be as many as 10 million people impacted by credit report errors causing citizens to pay higher interest than they should.

The Credit Bureau Reporting Process

The credit bureaus collect financial information about you from lenders, businesses which have extended you credit, such as banks, credit card companies or mortgage providers. In many cases, these inaccuracies are reported by debt collection firms. In fact in recent findings show that nearly 40 percent of disputes filed against the major credit reporting agencies have to do with debt collectors. All of this information is regularly updated to the credit reporting agencies on the status of your accounts, and whether the debts are kept current and in good standing.

If you have ever taken out a loan, used a credit card or taken advantage of a “buy now, pay later” offer, you will have a credit history. Whenever a financial institution, such as a bank, a credit card company, or any other business gives you credit, it may send information about whether or not you make your payments on time to a credit-reporting agency.

Because your credit report can have such a great influence on decisions others make about you, it’s important to know what your credit report says and how to ensure that the information is accurate.

It is important to know that businesses and corporations owe a duty of care and are liable for false or inaccurate reported credit ratings .

How Long Does Information Stay on Your Report

In some cases, negative ratings damage your credit rating for period of six years as stated on the websites of Equifax and Transunion.

In most cases, you may have suffered a loss of credit capacity as a result of the falsely reported debt and may not be able to  not obtain a loan and/or in the alternative would have  to pay a higher interest on the loan than you  would in the absence of the inaccurate rating.

In addition; you may be denied credit on the basis of the negative rating which may lead to emotional distress and may  stop applying for credit or you may have had an undamaged credit history and would have not suffered from any previous credit issues until the negative reporting listed by the business or corporation.

An Ontario court has given a strong incentive for banks and credit reporting agencies to act faster and more efficiently when a consumer brings attention to an error in his credit report.

In January 1994, Robert Neil Clark applied for a personal loan with the Royal Bank of Canada. He learned that he had an R-9 credit rating, dated 1993, due to unpaid retail debt he allegedly owed to the Bank of Nova Scotia. (R-9 and I-9 are the worst possible ratings in a credit report.)

Clark then contacted Equifax Canada Inc., a national credit reporting agency that reports information provided to it by its members. He was assured of an investigation and correction in case of an error.

From 1994 to 2000, he had difficulties obtaining credit. In the course of eventually receiving all the loan approvals, various banks often told him of the R-9 entry on his report.

He also reported repeated communications with both Scotiabank and Equifax over this matter. Finally, in 2000, Equifax confirmed that the delinquent loan was not against Clark, but another person with a similar first and last name but a different middle name.

Clark sued Scotiabank, which reported the R-9 rating in the first place, and Equifax, on the grounds that the continuing misrepresentation of his credit had affected his life and that he had suffered serious depression as a result. He argued that the Scotiabank and Equifax were negligent in their duties and were liable for his psychological problems.

In June, Justice Gerald F. Day of the Ontario Superior Court ruled in favour of Clark. Quoting an earlier Ontario court decision, he wrote that if credit-reporting agencies are negligent in gathering and reporting information, and if their report is inaccurate, their actions could cause creditors to either deny credit or charge more than usual.

Pointing to the importance of credit and credit ratings in our society, he said credit reporters had to be accurate, skilled and diligent.

Justice Day ruled that Scotiabank and Equifax failed to take reasonable care with Clark’s credit rating. Equifax did nothing for many years, he wrote.

Scotiabank admitted its failure, and although Equifax could not be blamed for supplying information provided by the bank, it could be faulted for not responding to the plaintiff’s repeated requests for clarification over several years.

Clark claimed damages for distress and loss of financial reputation as a result of the actions of Scotiabank and Equifax, but was unable to prove actual monetary loss. Instead, the judge awarded him $5,000 against each defendant for intrusion on the financial integrity he is entitled to enjoy.

The Clark case, one hopes, will serve as a strong incentive for financial institutions and credit reporting agencies to be more responsive when consumers ask for corrections to their credit history.@BobAaron

Our Paralegal’s Defend Your Rights Against the Credit Reporting Bureaus

Learn more by contacting us, to see how we can help you resolve your credit report errors quickly with a no-fee consultation.