When it comes to applying for most financial products, your credit report plays a crucial role. You can think of it like a financial report card, giving lenders a snapshot into your money management skills to determine your financial health and stability.
Your credit report shows information about your credit accounts, including credit cards, loans, mortgages, any other debts you may have. Your credit report also shows negative items as well.
So what are negative items, anyway? They’re items such as late payments, collections items, bankruptcies, court judgements, and the like – that can weigh heavily on your credit score. But, if you do check your credit report and see a negative item, that’s OK. In this article, we’ll explore what steps you can take to get negative items removed from your credit report to improve your credit score, and financial well-being in general.
Why should you care about your credit score and report?
No matter how you slice it, your credit report plays a vital role in your financial life. When you apply for a loan, a mortgage, credit card, or even a new phone plan, lenders and service providers will usually request a copy of your credit report. They will review your report to determine if you're a responsible borrower that is likely to pay them back on time.
Your credit report also includes your credit score, which is a three-digit number from 300-900 that represents your creditworthiness. The credit bureaus calculate your credit score based on a variety of factors. The higher your credit score is, the more likely you are to be approved from credit and offered a lower interest rate. On the other hand, a low credit score can make it harder to get approved for the best loans and credit cards, and could result in higher interest rates – or even rejection.
While a credit score above 660 generally means you shouldn’t have any trouble getting approved for credit, it’s important to note that lenders often have their own criteria for evaluating credit scores. Your best bet is to aim for a healthy high score and monitor your credit score and report often – and limit the number of negative items you have on your credit report.
Can negative items be removed from my credit report?
We all want to see a credit report with only the positives. But personal finance can be tough, and it can sometimes be a bumpy road as we learn to use credit responsibly. If you’ve had a few missed payments or defaulted on a loan, your credit report will reflect that, and your credit score may have been dinged as well. In some situations, the credit bureau could have also made a mistake, which is why it’s so important to monitor your credit score and report.
The good news is that depending on the situation, some negative items can be removed from your credit report – but the process can vary. While not all items can be removed, many can be challenged and potentially eliminated from your report. Also, all items fall off your credit report in due time, which means you’ll get a fresh start eventually.
In Canada, credit reporting legislation safeguards consumer rights, meaning that you have the right to dispute inaccurate or incomplete information on your credit report. This means that if you believe a negative item is incorrect or outdated, you can take action to have it corrected or removed. If the credit bureaus find that the disputed information doesn't belong to you or is outdated, they are obligated to remove it.
Some mistakes that could occur on your credit report include:
Payments that were mistakenly labeled as late
Closed accounts that are still shown as open
A case of mistaken identity: you could even find that the information in your report actually belongs to someone else with a similar name – mixing up information on your report.
Once the credit bureau receives a dispute, they are required to investigate and correct any errors, typically taking 30 to 45 days. The bureau will reach out to the creditor or lender who provided the negative information to verify the accuracy of the information. If the bureau can’t verify the information, they must remove the negative item from your report. If the negative item is accurate and verifiable, it’s more challenging to remove inquiries from your credit report. Depending on the severity of the item, it can stay on your credit report for several years – typically ranging from 7-10 years.
It’s important to start the process with realistic expectations and understand the timeframes involved in the removal process. And if your credit score took a hit because of accurate negative information, like an account that was sent to collections, it’s a great idea to start working on repairing your credit over time.
How to go about removing negative items from your credit report
Check your credit score and report often
The best way to make sure that your credit is in good standing is to keep an eye on your credit score and report. Start by doing a credit check and obtaining a free copy of your credit report from each of the major credit bureaus: Equifax or TransUnion. You can also keep regular tabs on your credit history with free reports from online companies and apps like Borrowell. Review your report carefully, identifying any negative items that you believe to be inaccurate, outdated, or incomplete.
If the negative items are your fault, just wait it out
Now, first and foremost, if the negative item was due to something that occured—like a late payment or filing for bankruptcy—it will appear in your credit history for a while. Here’s a rundown of the timelines you’re working with:
Late payments – can be reported for as long as seven years from when the delinquency occurred.
Collection accounts – can stay on your credit report for six years from the date of the first delinquency.
Bankruptcies – If you’ve filed for bankruptcy once, you can expect six years from the date you're discharged. If you’ve filed for bankruptcy twice, it can last up to 14 years on your credit report. It will also depend on the bureau and province.
We get it – we’d also love to see those negative items disappear a little quicker. However, lenders expect you to take responsibility for paying your debt on time, regardless of the situation. It may be frustrating, but these timelines are but an essential part of how the credit reporting process works. So, take a deep breath and be patient because those negative items will eventually fade away on their own.
If there are errors, dispute the negative items with the credit bureau
If you do spot an error on your credit report that should definitely not be there, you can file a dispute with the credit bureau. You’ll want to check your credit report with both Equifax and TransUnion to see if the error is on one or both reports. To do this, you must provide a clear and concise explanation of why you believe the negative item is inaccurate, along with any supporting documentation. These can include:
Credit card or bank statements
Utility bills and receipts of payment
Letters from lenders certifying mistakes
Pay stubs from your work
Utility bills and receipts of payment
Proof of identity (birth certificate, driver's license, passport, etc.)
Police reports (just in case you assume it’s an issue of identity theft)
How to file a dispute with Equifax
To dispute with Equifax, you have two options: online or by mail. For online disputes, visit their website. If you prefer mail, download the Consumer Credit Report Update Form, fill it out, and send it to Equifax Canada Co. at the address below:
Equifax Canada Co.
Consumer Relations Department
Box 190 Jean Talon Station
Montreal, Quebec
H1S 2Z2
How to file a dispute with TransUnion
To dispute with TransUnion, you have three options: online, by phone, or by mail.
Online – Start an application through TransUnion's online portal for a convenient online dispute process.
By Phone – Speak to a TransUnion representative at the provided numbers: 1-800-663-9980 (for English service) or 1-877-713-3393 and 514-335-0374 (for French service).
By Mail – Download and complete the Investigation Request Form (English form or French form). Mail the filled form to the appropriate address:
For English service:
TransUnion Consumer Relations Department
P.O. Box 338, LCD1
Hamilton, Ontario
L8L 7W2
For French service:
TransUnion Centre de relations au consommateur
CP 1433 Succ. St-Martin
Laval, QC, H7V 3P7
Regardless of what you may be disputing, it will take a bit of time for the bureaus to verify information. When disputing your credit report, patience is your friend. In the meantime, be sure to keep making on-time payments and watching your credit usage to see if you can improve your score while you wait.
What do I do if the dispute is unsuccessful?
In some situations, no matter how hard you may try, your dispute might be unsuccessful. But don’t lose hope. There are a few more things you can try:
Reach out to the lender directly
Instead of going directly to the credit bureau, consider reaching out directly to the creditor or lender involved—like your mortgage provider, credit card company, or utility company. Provide them with any evidence or documentation supporting your claim. In some cases, they may be willing to work with you to resolve the issue and update the information reported to Equifax and TransUnion.
Sending a goodwill letter
If the credit bureaus don’t accept your dispute because the negative item was your responsibility, try sending a letter of goodwill to the lender or collection agency. You can explain your reasons for being late and see if they could help remove it from your account because you’ve been responsible up until this point. In the best case scenario, they would report the new information to the credit bureau to remove the item.
Ask for help
If you’re overwhelmed by the dispute process or are unsuccessful, it’s alright to ask for help. You could reach out to a reputable credit repair agency or a consumer law attorney who specializes in credit issues. They can guide you through the process, help you draft an effective dispute letter, negotiate with your creditors, explore other legal options, and provide expert assistance to improve your chances of success. But, beware of scams – if someone says they can fix your credit overnight, run for the hills!
The bottom line
Removing negative items from your credit report requires patience, persistence, and a proactive approach. While it may not be possible to remove all negative items, disputing all inaccurate information or errors when you catch them can have a positive impact on your credit score and financial future.
Follow the proper channels for disputing negative items. And if your initial attempts are unsuccessful, don't hesitate to seek professional assistance from credit repair agencies or consumer law attorneys.
At the end of the day, building and maintaining good credit is a marathon, not a sprint. Paying your bills on time, keeping your credit card balances low, and managing debt responsibly can contribute to a good credit history over time – but there’s no quick fix to health credit. If you think you could use a bit of extra help, give KOHO’s Credit Building a try to start paving the way for a stronger financial foundation. Your future plans will thank you for it!