When Does a Bankruptcy Clear from Credit Report?

What is credit reporting and how does it affect me?

In Canada there are two major credit reporting agencies; Equifax and TransUnion. Most people commonly refer to these agencies as the ‘credit bureaus’. Credit reporting agencies do exactly that: they report credit history. They can also be referred to as an information service as they provide copies of your credit report to potential lenders. This allows the banks and other lenders to determine how much risk they are taking when they loan you money. Whenever anyone lends money they are taking a risk that it will not be repaid.

By reviewing your credit history the lender is determining how risky you are and if they prepared to take that risk. To get any significant credit, you need a good borrowing history.

Approximately once each month every major lender in Canada (the banks, credit card companies, finance companies) sends a report about their borrowers to the credit bureaus. Also, the federal Superintendent of Bankruptcy reports a list of everyone who filed a consumer proposal or bankruptcy to the credit bureaus, as well as a list of everyone who has been discharged. The credit bureaus collect this information, summarize it, and sell it to their members, the lenders.

When you apply for credit you normally sign an application that provides the lender consent to access your credit history. Generally this consent allows then access not only the first time you apply, but anytime afterwards as well, as long as your account is open. It is also this consent that allows the lender to provide the bureau information on your payments etc. once you have been approved.

How long does a bankruptcy or consumer proposal stay on my credit report?

How long bankruptcy stays on your credit report in Canada will depend on the credit bureau that is reporting.

The largest credit bureau in Canada, Equifax, maintains this record on your credit report for a period from the date of your discharge or last payment:

  • A first bankruptcy for six years from the date of your discharge.
  • A second bankruptcy for 14 years.

The TransUnion web site states that they keep a bankruptcy on your credit file for six to seven years from the date of discharge or fourteen years from the filing date (depending on provincial legislation).

At this point the bankruptcy will leave the credit report and you will need to start to rebuild your credit.

How long a consumer proposal stays on your credit report again depends on the credit bureau that is reporting.

With Equifax, a consumer proposal is reported for three years after your last payment.

What if there is an error on my credit report?

Credit bureaus maintain accurate databases of borrowing history, but the data is not perfect because it is supplied by humans, who can make mistakes. You do not want to be rejected for your next loan because the wrong address is listed on your report or there is a misspelling of your name. This is also a good time to ensure you have not been the victim of identity theft. Check to make sure that accounts listed or applied for were done by you.

The first thing to do if you find an error is to contact the credit reporting agency, and inform them of the error. The credit reporting agency will contact the financial institution that reported the information to confirm it is indeed an error.

How can I get a copy of my credit record?

There are two ways to get your credit report (also known as a ‘credit file disclosure’ or a ‘consumer disclosure’): either through the mail or via the internet. If you want to obtain your credit report for free, you must use the mail. It is also important to do what you can to make sure your credit report shows a history of reliable credit repayments, and as few unfavorable repayment incidents as possible.

For more detailed information related to credit reporting, visit Equifax Canada or Trans Union website.