If you have bad credit, you may be wondering how long it will stay on your credit report. In Canada, bad credit information stays on your credit report for six to ten years. The duration depends on the type of information reported, as well as Canada’s credit reporting agency policies.
Not everyone with bad credit will have the same credit report history. Some may only have a few late payments, while others may have a long history of missed payments, collections accounts, and even bankruptcy.
The good news is that bad credit will not stay on your credit report forever. It's important to know, however, that the length of time it will remain on your report depends on the type of information reported.
Here's a look at how long different types of bad credit can stay on your credit report in Canada.
Credit bureaus in Canada (Transunion, Equifax)
In Canada, there are two main credit bureaus: Equifax and TransUnion.
Equifax's credit report policy is to remove most negative information after six to ten years (depending on the province you reside in). TransUnion's policy is to remove most negative information after six years, except bankruptcies, which stay on your report for seven to ten years. Because each credit bureau acts independently of one another, your Equifax credit score and your TransUnion credit score may be different. TransUnion allows Canadians to get a free credit report any time.
Why Does Information Stay on Your Credit Report for Years?
It may seem unfair that bad credit information can stay on your credit report file for years, but there are a few reasons why this is the case.
First, it's important to remember that your credit report is a history of how you've handled your finances in the past. Lenders want to see a history of responsible borrowing and repayment before they approve a loan or credit card. For example, if you have a history of late payments, that's an indicator that you may not be able to repay a new loan on time.
But, it's not always a deciding factor when being approved for a loan. Some lenders can still approve you for a loan even if you have bad credit, but you may have less flexible terms, such as a smaller borrowing amount and a shorter repayment period.
Second, credit reporting agencies want to allow you to improve your credit score. If all negative information were removed from your credit report after a few years, it would be harder to track your progress. So, having the information readily available can show how much you've improved your credit over time.
For example, let's say you have a late payment on your credit report from five years ago. If that late payment were removed, you would no longer be able to see how much your credit score has improved since then.
Lastly, credit reporting agencies want to make sure that the information on your credit report is accurate. If negative information is removed too soon, it could mean that some legitimate information is also removed.
What Type of Information Stays on Your Credit Report?
The type of information that's reported to the credit bureau will also affect how long it stays on your credit report. This is because some types of information are more serious than others.
For example, a late payment will have a less severe impact on your credit score than a bankruptcy. As a result, a late payment will stay on your report for a shorter period of time than a bankruptcy.
Here's a look at how long different types of bad credit can stay:
Late Payments
Late payments on loans and credit cards are one of the most common types of bad credit and can stay on your credit report for up to seven years. If you have a late payment, it will be reported to the credit bureau by your lender.
Bankruptcies
If you declare bankruptcy, it remains on your credit report for six to ten years. This information is public record, so the credit bureaus will be able to see it. It's also important to note that even if you declare bankruptcy, you're still responsible for any debts that are not discharged in the bankruptcy.
Collections
If you have unpaid debts from previous loans or credit cards that are sent to collections, it remains on the credit report for six to ten years, depending on the province in which you reside. This information is also public record, so the credit bureaus will be able to see it.
Consumer Proposals
A consumer proposal will stay on your credit report for three years after you've completed the proposal or 6 years from when the proposal was filed - whichever comes first.
A consumer proposal is a bankruptcy alternative, and allows you to repay your debts over some time. It's important to note that a consumer proposal will have a similar impact on your credit score as a bankruptcy, however, it's not as serious.
Credit Inquiries
When it comes to understanding your credit report, it's important to know the difference between a hard inquiry and a soft inquiry.
A hard inquiry is when a financial institution or lender checks your credit report when you apply for a loan or credit card. This type of inquiry will stay on your credit report for two years.
A soft inquiry is when a company checks your credit report for non-lending purposes, such as when you get a free credit report from your bank or when a company checks your credit to offer you a pre-approved credit card. Soft credit report inquiries do not impact your credit score and will fall off your credit report file after one year.
Are Credit Reports the Same Across Each Province?
No, each Canadian province has different credit reporting rules and regulations for how long debt stays on your credit report. For example, in Ontario, the maximum length of time that bad credit can stay on your report is six years. In Alberta, however, the maximum length of time is 10 years.
It's important to check with your local credit reporting agency to find out the specific rules in your province. This is important because the maximum length of time that bad credit can stay on your report may impact your ability to get the proper loan amount you need.
For example, if you're looking to buy a house and your credit reports show that you have bad credit from eight years ago, you may have trouble qualifying for a mortgage.
What Happens When Bad Credit Information Gets Removed From Your Report?
When bad credit is removed from your report, it will no longer impact your credit score. This means that your score could go up if you have a lot of negative information on your report that's been removed.
It's also a great thing to know that once bad credit is removed from your report, you'll have a clean slate and can start working on rebuilding your credit even further. However, if you continue to make late payments or default on loans, you'll find yourself in the same situation again.
How to Remove Negative Credit Information From Your Credit Report in Canada?
There are a few ways to remove negative items from your credit report. The first is to wait it out. As mentioned above, most negative information will fall off your credit report after a certain amount of time.
The second way to remove negative items from your credit report is to dispute them. If you think that an item on your credit report is inaccurate, you can file a dispute with the credit bureau. The credit bureau will then investigate the dispute and if they find that the information is inaccurate, they will remove it from your credit report.
Another way to remove negative items from your credit report is to use a reputable credit repair service. Credit repair services work by negotiating with your creditors to have negative items removed from your credit report.
While you can try to remove negative items from your credit report on your own, it's often best to work with a professional credit repair service. This is because they have the experience and knowledge to get the job done quickly and efficiently.
Getting a Loan With Bad Credit
Although you may think that having bad credit history will prevent you from getting a loan entirely, that is not the case. There are still lenders out there who are willing to work with people with bad credit.
Of course, the terms of the loan may not be as favourable as if you had good credit. For example, you may not qualify for the full amount you originally applied for. That said, iCash specializes in loans for people with bad credit. So, if you're having trouble getting a loan from a traditional lender, you may want to consider getting a short term loan with us. Our terms are fair, and while we require a credit check, we don't look at bad credit as a deal-breaker for getting approved.
Plus, iCash offers both a convenient and paperless way to get cash when you need it most. You can apply for a loan of up to $1,500 and receive the money you need in as little as two minutes - good credit, bad credit, or no credit at all.
