At Birchwood Credit Solutions, we like to think of credit reports as financial history. It collects all your past payment habits, loans and credit card activity that then acts as a tool for any lenders interested in lending you money. But of course, the question on everyone’s mind is how long does that bad credit stay on your report. And whether there’s a way to eliminate it from your report faster.
This post is going to look at how long credit history stays on your report as well as what type of information stays on your report longer than others.
We’ll go over the following concepts:
- How long bad credit information stays on your account
- How long good credit information stays on your account
- What type of credit information shows up on your report
How long bad credit information stays on your credit report
Let’s get to it right away: debt sent to collection agencies — a.k.a. bad credit information or delinquent credit accounts — generally stays on your record for six years. However, the exact length of time is also dependant on the credit bureau.
Equifax Canada counts from the date the debt is first assigned to a collection agency. Whereas TransUnion Canada counts from the date of when the account first became delinquent with the original lender.
The reason bad credit stays on your account for several years is because it’s necessary for lenders to determine your risk level before approving a loan. Unfortunately, there’s no manner for deleting or eliminating this information from your report. The best option is making payments on time, only apply for credit you know you can pay-off and making credit inquiries strategically.
There are multiple reasons bad credit may appear on your report. But the following list is the most common bad credit information and the average length of time it appears for.
- Multiple bankruptcies
- Credit cards
- Lines of credit
- A secured loan backed by an asset
- Non-sufficient funds (NSF)
- Closed chequing or savings accounts due to fraud
- TransUnion Canada inquiries
- Legal judgements
- Debt management programs (DMP), if not repaid
4 or fewer years
- Consumer proposals
- Liens with TransUnion Canada
- Equifax Canada inquiries
- Orderly payment of debts (OPD) with either Equifax Canada or TransUnion Canada
How long good credit information stays on your credit report
The good news is, good credit stays on your report for much longer than bad credit does. Any credit account that was paid off on-time and is in good-standing will stay on your report for upwards of 20 years.
Sometimes, people believe it’s bad to have past credit history on your account for a long period of time. This isn’t the case. Rather, this is exactly the type of information you do want on your account as it shows a lender you have lots of financial experience and are responsible to manage a loan. A long, positive and on-going credit history is what you should strive for on your credit report.
What type of credit information shows up on your credit report
Whether good or bad, your credit report contains a large amount of information about your past spending and repayment habits. The two credit bureaus in Canada, Equifax Canada and TransUnion Canada, have access to this information and use it to determine your creditworthiness — or your credit score.
Here’s the information that shows up on your report:
- Credit transactions: credit cards and lines of credit
- Secured loans: mortgages, car leases or personal loans
- Bank accounts: closed chequing and savings accounts
- Legal judgements: lawsuits or court rulings
- Debt collection: if sent to a collection agency
- Credit inquiries: read our post How Do Credit Checks Impact Your Credit Score to learn more
- Registered items: a form of security interest granted over an item of property
- Consumer proposals: the legal agreement between you and a lender
At Birchwood Credit Solutions our in-house financing experts look beyond your credit score and take your whole financial situation into account when processing your car loan application. Get in touch with us today to find out more about our quick and easy online applications.
Wondering how long does it take to build credit in Canada? Look no further because we cover everything you need to know plus some bonus tips on how to speed up the process.
Around 27,000 Canadians report identity theft each year. There are similar issues in the United States, so much so that in May 2018, the U.S passed a law to mandate free credit freezes as a means of fraud protection. As of 2020, you still cannot get a credit freeze in Canada.
Related blog posts:
- 5 Reasons Why You Should Check Your Credit Score Regularly
- Credit Score Ranges in Canada Explained
- 5 Credit Misconceptions That Can Lead to Bad Credit
- Rebuilding Your Credit Score with a Car Loan
- Minimum Requirements for a Car Loan with Bad Credit
- How to Get a Car Loan with Bad Credit
- What to Expect When Buying a Car with Bad Credit