How Long Negative Information Stays On Your Credit Report in Canada

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 on the report — like late payments, collections, or bankruptcies — signals risk to lenders, and can make them think twice about granting you credit or offering you their best interest rates.

Provincial laws set how long credit bureaus can keep negative information on your credit report. Based on the current information we've been able to find, here’s how long the most common types of negative information reported by your creditors typically stay on your credit file in Canada:

• Credit checks: 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 depending on the province (in Alberta, it's 6 years), even if you later resolve the issue with the creditor.
• 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.
• Bankruptcy: While you’re in bankruptcy, it will remain on your report as an in-progress bankruptcy. Once you are discharged from the bankruptcy, it stays on your report as a completed bankruptcy for 6 to 7 years from the date you are discharged if it’s your first bankruptcy (depending on the credit reporting agency and the province - in Alberta, it's 6 years regardless), and 14 years if it is not your first bankruptcy.
• Consumer Proposal: While you’re working on paying your 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.

As you can see, negative marks eventually drop off, but the impacts can be felt for a substantial period of time. If you have negative items on your credit report, there are things you can do in the meantime, such as:

• Seriously consider the underlying issues that led to the credit issues and take the appropriate steps to fix them, such as:
  • Setting up reminders or automatic payments to ensure you will pay bills on time going forward.
  • Examining your budget and spending habits and cutting back on unnecessary credit use.
• Focus on building positive credit history to offset the negative. For example, using a credit card responsibly while keeping a low balance will provide you with some good credit history. Just don't go too overboard - having too many credit accounts open can be a red flag even if you are managing them carefully.
• 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, such as a mortgage broker, if you are looking to take on new debt. Some lenders may be more willing to look past a negative mark or two if all else is well, and professional brokers make it their job to know which lenders would be the best fit for you.

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 rates on credit, but they’re not permanent. Time heals credit wounds, and good habits can speed up recovery. But 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 to fix the underlying issues, so that you can start the clock on getting your credit report cleaned up. Then, once you have done everything you can do, staying consistent will help you rebuild.  

Charla Smith & Company is a Calgary-based Licensed Insolvency Trustee, serving the Alberta region. We regularly help individuals consider their options when they are dealing with debt problems. If you need help reviewing options and understanding how those options will impact your credit score, we can help. Just reach out.

Disclaimer: This publication provides general information and should be seen as broad guidance only. The information contained herein cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon this information without obtaining specific professional advice relating to your particular circumstances. Charla Smith & Company Ltd. does not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.