If you have clicked on this article, it is highly likely you are worried about collections, and want to know ‘how long do collections stay on credit report?’ We are often asked this question, which is understandable given the importance of your credit score. In fact, your credit report and credit score are key to almost any financial actions you take. Your credit report contains your complete credit history and any accompanying financial information – both good and bad. In this article, we share how long collections will stay on your credit report, as well as ways to have the entries removed from your credit report.
What is a credit report?
A credit report is a formal track of your financial history. Credit reports are produced by Canada’s primary credit bureaus – Equifax and TransUnion. They will keep both positive and negative information on a credit report, including any payments that were made, or those not made or late. You can download a free report from both of these credit bureaus once a year. Credit bureaus keep this information on your credit report for a certain amount of time. This time period is dependent on a number of different factors:
- The type of financial information
- Your province of residence
- The credit bureau that produced the credit report
Bill payments are reported by lenders to Canada’s credit bureaus, who then update your credit report each month. Each time your credit report is updated, your credit score will also change accordingly. For this reason, you could be nervous if you have negative information logged on your credit report, including collections. You may be worried about how this will affect your credit score. It can impact your ability to take out new credit or loans, and sometimes it can even affect your employment or ability to secure rental accommodation.
How long do collections stay on credit report?
If you are wondering how quickly you can have a collections entry removed from your credit report, there are set timeframes in place by the credit bureaus. Generally speaking, negative information is removed from your credit report six years since the date of the last activity. Some information can, however, remain for a shorter or longer period. Negative information can include missed debt payments, accounts sent to a collection agency, and any previous bankruptcies that might have been filed. These types of negative information can have a negative impact on your credit score. If you are late to make your debt payments or fail to make a payment at all, your debt could be assigned or sold to a debt collection agency. The sole purpose of a collection agency is to reclaim their money, and so they will harass you with collection calls, mail, and often show up at your door in order to chase up their repayment. While dealing with collection agencies is one thing, collections on your debt will be flagged on your credit report regardless of whether or not the debt has been paid. While collection entries on your credit report will be removed after six years, it is still recommended that you make your debt repayments. Unpaid debts can have an even more serious impact on your credit score.
Can I get collections removed from my credit report sooner?
Usually, collections will be removed from your credit report by the passing of time, before you can begin rebuilding your credit score. You should review your credit report in detail to spot any collection entries, and then most Canadians will wait for the Statute of Limitations to pass before the collection entries are removed from your report. There are also some ways you may be able to remove collections from your credit report sooner. You may wish to ask your creditors if they can remove the negative entries. Perhaps before your debt was in collections, you always made your payments on time. While collection agencies have no obligation to do so, they may agree to do it. You can also choose to offer pay for removal by giving your creditors a lump sum. This is usually most successful in instances where debts are old, and where your account and payment history is generally pretty good. You could also speak to a Licensed Insolvency Trustee, the only professionals in Canada legally able to file all forms of debt relief. They will offer great advice on how to get collections entries removed from your credit report, and can also review your financial circumstances to see whether you would benefit from filing a form of debt relief. If you are struggling with collection agencies contacting you, they can help you to put a permanent stop to this via a stay of proceedings when filing either a consumer proposal or a bankruptcy.
What if I see something on my credit report that should not be there?
While you should be careful not to request a copy of your credit report too often for danger of having a negative impact on your credit report, it is important to keep an eye on it. You may even see an entry that does not make sense to you. Credit bureaus do not always get it right, and you may spot an anomaly like a bankruptcy being filed on your credit report, which you have never filed. It is important to identify mistakes like this, as they can have a huge negative impact on your credit score. By making notes of any errors and contacting the credit bureaus in a timely manner, it should be relatively easy to have these entries removed from your credit report.
The good news is that any entry does not need to remain on your credit report for good. At Spergel, we can help to answer ‘how long do collections stay on credit report?’, and will help you to improve your credit score. We can also help you to make sense of your financial circumstances, and support you if you need to file a form of debt relief. Book a free consultation with Spergel today – you owe it to yourself.