How Long Negative Information Stays On Your Credit Report in Canada

Here is a summary of the most common types of negative information and how long they typically remain on your Canadian credit report:

Understanding Your Credit Report

A credit report is essentially a financial report card. It shows potential new lenders how you've handled borrowing in the past, based on what your existing or past lenders have reported.

Credit reporting in Canada is handled by two main agencies: Equifax and TransUnion. There are others who can provide the information to you, such as Credit Karma, but they are just showing you what is reported by Equifax and/or TransUnion. While the rules these two agencies follow for reporting are generally similar, small differences in reporting timelines can occur between them. Potential lenders may check both reports, so both are relevant.

Each item reported corresponds with a rating depending on how good or bad it is, which flows into your credit score. Positive information, such as credit accounts that you've paid as agreed and have no negative history, can stay on your report indefinitely as long as you keep the account open. Once you've closed the account, it will stay on the report for up to 20 years.

Negative information has a shorter shelf life which is a good thing, because regardless of your overall score, negative information signals risk to lenders and can make them think twice about granting you credit or offering you their best interest rates.

How Long Each Type of Negative Information Stays on Your Credit Report

Provincial laws set how long credit bureaus can keep negative information on your credit report. Here is the detailed breakdown:

Credit checks (hard inquiries)

Each time you allow a potential lender to check your credit report, it signals that your debt may be increasing. Equifax keeps this information for 3 years; TransUnion for 6 years.

Late payments

Up to 6 years from the date of the missed payment. Even if you catch your payments up, the record of being late at some point can remain.

Accounts in collection

Up to 6 years from the date of default. If you didn't pay a bill and it was sent to collections, that history can remain even if you later pay it off.

Judgments

If a creditor successfully sues you in court and it is reported to the credit bureaus, this information will stay on your report for 6 to 10 years, even if you later resolve the issue with the creditor, depending on the province. In Alberta, it's 6 years.

Debt Management Plans (including an Orderly Payment of Debts Program)

Assuming your creditors report it, while you're in the payment plan it will remain on your report as an in-progress debt management plan. After you're done, it can stay as a completed plan for 2 more years. If you default on the plan, it will show up for 6 years like any other default.

Consumer Proposal

While you're working on paying your consumer proposal, it will remain on your report as an in-progress proposal. After you're done, it stays as a completed proposal for 1–3 more years, to a maximum overall of 6 years from the date you filed. This can be better than the credit impact of bankruptcy, which is one factor which can make a consumer proposal the preferred option for those who qualify.

Bankruptcy

While you're in bankruptcy, it will remain on your report as an in-progress bankruptcy. Once you are discharged, it stays on your report as a completed bankruptcy for 6–7 years from the date of discharge if it's your first bankruptcy (in Alberta, it's 6 years regardless), and 14 years if it is not your first bankruptcy.

Worried about how debt options will affect your credit?

Every situation is different. A Licensed Insolvency Trustee can walk you through exactly how a consumer proposal or bankruptcy would appear on your credit report and how quickly you can start rebuilding. Charla Smith & Company offers a free, no-obligation consultation in Calgary.

→ Book a free credit impact consultation

As you can see, negative marks eventually drop off but the impacts can be felt for a substantial period. In the meantime, there are things you can do:

• Seriously consider the underlying issues that led to the credit problems and take appropriate steps: set up automatic payments, examine your budget, and cut back on unnecessary credit use.
• Focus on building positive credit history to offset the negative. Using a credit card responsibly while keeping a low balance provides good credit history — just don't overextend yourself, as too many open accounts can also be a red flag.
• Monitor your credit report to track your progress and look out for errors. You're entitled to a free copy once a year from both Equifax and TransUnion.
• Formally dispute any errors you see on your credit report.
• Enlist the help of a professional if you're looking to take on new debt. Some lenders are more willing to look past a negative mark or two if all else is well.

The Most Important Step: Treat the Root Cause

There's no doubt that negative marks on your credit report are stressful and can impact your ability to get new credit or get decent interest rates, but they're not permanent. Time heals credit wounds, and good habits can speed up recovery.

Ultimately, you need to make sure you've treated the root cause of your credit issues. Sometimes that means better budgeting or being more organized. Sometimes it means making a bankruptcy or consumer proposal filing to deal with untenable debt. Whatever the case, it's better to get started right away so you can start the clock on getting your credit report cleaned up.