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FINANCIALLY AESTHETIC · GUIDE 13/37
ERRORS, DISPUTES, FREEZES & REBUILDING DAMAGED CREDIT
FA-2.7 · Banking, Payments & Credit
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WHAT THIS CONTROLS
Bad data and identity theft can damage a file even when your own payment habits are fine.
Check Your Credit Report for Errors and Fraud
Check your credit report regularly to make sure the information is accurate. Look for errors or signs of fraud, such as accounts you didn’t open.
Your credit report shows how you manage your credit. Lenders use it to decide whether to offer you credit or a loan, and at what interest rate. It can also affect your ability to rent a home or get certain jobs.
Errors in your report can:
- make it harder to get a credit card or a loan
- result in higher interest rates
- be a sign of identity theft or fraud
Check your credit report regularly for errors or fraud. Get your credit report from Equifax and TransUnion. This will help you spot problems sooner.
When you get your credit report, check for:
- errors in your personal information, such as an incorrect address or date of birth
- errors in loans or credit cards
- an incorrect payment history, such as payments marked as late by the lender when you actually paid on time
- accounts you didn’t open, which could be a sign of identity theft
- negative information about your accounts that still appears on your credit report after the maximum retention period
Accounts you don’t recognize may mean that someone has applied for credit in your name. Review them to make sure it isn’t fraud or identity theft.
Credit Monitoring
Credit monitoring alerts you to certain changes in your credit report and credit score. For example, a new credit inquiry. It can help you quickly detect identity theft or credit card fraud - especially if someone applies for credit in your name.
You may want to use credit monitoring if:
- you think someone has stolen your identity
- you think you’ve been a victim of fraud
- a data breach has compromised your personal information
Credit bureaus in Canada and many credit card issuers and financial institutions offer credit monitoring services. You generally have to pay for these services. Some institutions may offer them for free in certain situations - for example, if you’ve been affected by a data breach.
Reporting Errors or Fraud on Your Credit Report
If you find an error or potential fraud in your credit report:
1\. Contact the lender and any other organizations affected by the error to notify them of the suspected fraud
2\. Contact Equifax and TransUnion to ask them to place a fraud alert on your credit report
3\. Report the fraud through the national fraud reporting system.
In some provinces or territories, you can place a security freeze on your credit report. Credit bureaus may also refer to this as a “credit freeze” or “credit report lock.”
A security freeze locks your credit report. It blocks lenders from accessing your report and helps prevent fraudsters from opening accounts in your name. Be sure to remove the security freeze before applying for credit or a loan.
Contact Equifax and TransUnion to learn how to add a security freeze to your credit report and to check if you’re eligible.
File a fraud alert
A fraud alert or identity theft alert notifies lenders that you may be a victim of fraud. Before approving any credit inquiry, lenders must contact you to confirm your identity. This can help prevent future fraud.
Ask Equifax and TransUnion to place a fraud alert on your credit report if:
- you think you’ve been a victim of fraud or identity theft
- someone has stolen your wallet, ID, or smartphone
- someone has broken into your home or vehicle
Credit bureaus may ask you to provide identification. They may charge you fees.
Correcting Errors in Your Credit Report
You have the right to dispute any information in your credit report that you believe is incorrect. Credit bureaus must correct errors free of charge.
1\. Gather your documents. Collect all receipts, statements, and other documents proving that there is an error.
2\. Contact the two major credit bureaus in Canada. Use the forms provided by Equifax and TransUnion to report the error.
The credit bureaus will verify your request with the lender or company that provided them with the information. If they agree that there is an error, the credit bureaus will correct the information. If the lender or company states that the information is accurate, the credit bureaus will keep it on your credit report.
In some provinces, credit bureaus are required to send a copy of your revised credit report. They must send it to companies that have recently requested it.
3\. Contact the lender. You can speed up the process by contacting the lender directly. Ask them to check their records and provide updated information to the credit bureaus.
4\. Escalate your complaint. If you are not satisfied with the results of the investigation, ask to speak with someone at a higher level.
Federally regulated financial institutions must have a complaint-handling procedure in place. This procedure is designed to help resolve disputes with their customers. It includes the option to use an external complaint-handling organization.
5\. Add a consumer statement. If you are not satisfied with the results of the investigation, you can add a brief statement to your file. This statement explains your situation and is called a “consumer statement.” Adding a consumer statement to your credit report is free.
Credit bureaus determine the number of words allowed in your statement. This word count may vary depending on your province.
Lenders and others who review your credit report may take your statement into account when making a credit decision.
Filing a Complaint Against a Credit Bureau
The federal government does not regulate credit bureaus. If you believe a credit bureau has treated you unfairly, you can file a complaint. Start by contacting the credit bureau directly.
If you wish to file a complaint, contact your provincial or territorial consumer information office.
How Long Information Remains on Your Credit Report
Positive financial information
Positive information includes credit accounts that you’ve paid on time and without missing any payments. It shows that you use credit responsibly. Positive information can improve your credit score.
Credit bureaus keep positive information on your credit report for varying lengths of time:
- Equifax: Credit accounts paid in full remain on your report as long as they are open. Closed accounts remain on your report for up to 10 years
- TransUnion: Information remains on your report for up to 20 years, even if you close the account
Negative Financial Information
Negative information includes credit accounts with late or missed payments. It can signal to lenders that you’re having trouble managing your debts. It can also lower your credit score.
Examples of negative information:
- missed or late payments
- accounts that lenders send to collection agencies
- bankruptcies
- credit inquiries made by lenders
Credit bureaus can only keep negative information on your credit report for a certain amount of time. For example:
- Information about overdue or missed payments on credit cards and loans: up to 6 years
- credit inquiries made by lenders: 3 years for Equifax or 6 years for TransUnion
- a bankruptcy: 6 or 7 years, depending on the province
Judgments
A judgment is a court decision stating that you owe money to someone. For example, this could happen if you lose a lawsuit.
Credit bureaus generally keep judgments on your credit report for 6 years. TransUnion keeps this information longer in certain provinces:
- 7 years in Newfoundland and Labrador, Ontario, and Quebec
- 10 years in Prince Edward Island
Debt Management Plans
A debt management plan is an informal agreement between you and your creditors. Your creditors are the companies or organizations to which you owe money. A credit counsellor sets up a debt management plan on your behalf. The plan allows you to consolidate multiple debts into a single, affordable monthly payment.
Credit bureaus remove this information from your credit report 2 years after you have finished repaying your debts.
Consumer Proposals
A consumer proposal is a legal agreement between you and your creditors to pay a portion of your debts. A licensed insolvency trustee draws up this agreement on your behalf.
Equifax and TransUnion remove a consumer proposal from your credit report:
- 3 years after you have repaid all debts covered by the proposal, or
- 6 years after you signed the proposal (whichever comes first)
Bankruptcy
Bankruptcy is a legal process that helps you manage debts you cannot repay. Generally, Equifax and TransUnion remove a bankruptcy from your credit report 6 years after you are discharged from bankruptcy.
In the following provinces, TransUnion removes a bankruptcy from your credit report 7 years after your discharge from bankruptcy:
- Newfoundland and Labrador
- Ontario
- Prince Edward Island
- Quebec
If you file for bankruptcy more than once, credit bureaus will keep the information on your credit report for 14 years.
Rebuilding Damaged Credit
Pay Your Bills on Time
Your payment history shows whether you pay your bills on time. It is the most important factor in your credit score.
To improve your payment history:
- Always make your payments on time
- make at least the minimum payment if you can’t pay the full amount
- contact the lender immediately if you think you won’t be able to make a payment
- don’t skip a payment, even if you’re disputing certain fees
A strong payment history shows lenders that you reliably repay the money you owe.
Your financial institution may send you an alert when your available credit falls below a set amount, or when a payment is due. These alerts can help you track your expenses and ensure you don’t forget to make your payments.
Credit Utilization
Try to use less than 30% of your total credit limit. For example, suppose your credit card has a $5,000 limit and you typically use $1,000. Your credit utilization ratio is 20%.
To effectively manage your credit utilization ratio:
- Don’t exceed your credit limit
- try to have a higher credit limit and use only a small portion of it
- keep your monthly credit utilization ratio low, even if you pay off the balance in full
Lenders review your credit utilization ratio to assess how you manage your available credit. If you regularly use a large portion of your available credit, lenders may consider you a higher risk. This can be the case even if you pay off your debts in full each month. A low credit utilization ratio signals to lenders that you do not rely too heavily on borrowed money.
Improving Your Credit History
Your credit history includes how long you’ve had your credit accounts and whether you keep them active. Lenders want to see a stable, long-standing history. Keeping your accounts open and active for a long time can improve your credit score.
If you get a new credit card to transfer a balance, it counts as a new account. This can lower the average age of your accounts and cause your credit score to drop. If you close the old account, it can hurt your credit score even more.
Closing an old account causes you to:
- lose your credit history
- reduce your available credit
Keeping the old account open, even with a zero balance, helps you:
- maintain your credit history
- improve your credit utilization ratio
Consider keeping an account open if:
- the account has no annual fee
- you can manage it easily
- you can use it occasionally to keep it an asset
Limit the Frequency of Your Credit Inquiries
Credit inquiries, also known as credit checks, affect your credit score. When a lender checks your credit report, the credit bureau records the inquiry on your credit report.
It’s normal to apply for credit from time to time. However, a large number of credit inquiries made too close together may signal to lenders that:
- you have an urgent need for credit
- you are incurring expenses beyond your means
To limit credit inquiries:
- apply only for the credit you need
- avoid submitting multiple applications at the same time or too close together
- When shopping for an auto loan or a mortgage, get quotes from different lenders over a 2-week period. Credit bureaus treat these applications as a single
“Hard inquiries” appear on your credit report and affect your credit score. Anyone who checks your credit report can see these inquiries.
Examples of “impactful” inquiries:
- credit card applications
- mortgage applications
- credit inquiries and loan applications
- certain rental applications
- certain job applications
"Soft" inquiries appear on your credit report, but only you can see them. They do not affect your credit score.
Use Different Credit Products Wisely
Your credit history includes the various credit products you use. Your credit score may be lower if you have only one credit product.
It’s best to have a variety of credit products, such as:
- a credit card
- an auto loan
- a line of credit
Lenders want to see that you can manage more than one credit product responsibly. Borrow only the money you can afford to repay. You can damage your credit score by accumulating too much debt.
What Varies by Country: The French Case
No artificial equivalence with the North American “credit freeze”
The French section deliberately focuses on credit incident records, corrections, and removals documented by the Banque de France. This chapter does not present any French mechanism as the direct equivalent of a North American credit freeze when such an equivalence is not established by the sources.
You can have recorded credit incidents removed at any time by resolving them with the institution that reported them to the Banque de France.
If, while reviewing your records, you notice an error in the information contained in the files - for example, regarding your personal status - you must exercise your right to correction by contacting the institution that made the entry (for an entry related to an over-indebtedness measure, the request for correction must be made directly to the Banque de France).
The mechanisms for credit reports, security freezes, and disputes described above correspond to the Canadian system, which is organized around the credit bureaus Equifax and TransUnion. This system does not exist in the same form everywhere: this guide does not claim that every country has an identical credit report or security freeze mechanism.
In France, in the event of identity theft, the recommended steps involve other channels:
Keep all evidence in your possession and take screenshots. Depending on the situation: account name and address, messages, web page URLs, supporting documents, or any other information that may help you report the offense. These items will constitute legally admissible evidence in the event of subsequent legal proceedings.
File a complaint for each instance of identity theft at a police station or gendarmerie station, or in writing to the public prosecutor at the judicial court with jurisdiction over your area. Keep a copy of each complaint for use in your dealings with financial institutions, government agencies, etc.
Immediately notify all banks or financial institutions where you have an account that you have been a victim of identity theft. If your banking information has been stolen, freeze your accounts immediately. This is because the cybercriminal could carry out certain transactions without your knowledge, such as opening a bank account or taking out a credit. If your bank is informed, it will be able to monitor activity on your bank accounts.
Have your identification documents used by the scammers canceled and replaced.
Submit a sworn statement to all organizations that are holding you responsible to prove that you did not commit the alleged acts, attaching a copy of the police report you filed.
Contact the Banque de France to report the incident and verify whether any credits have been taken out or a bank account opened without your knowledge. Also check the Central Check Registry (FCC), the Registry of Consumer Credit Repayment Incidents (FICP), and the National Registry of Bank Accounts and Similar Accounts (FICOBA) to verify whether any fraudulent transactions have been carried out in your name.
Under French law, identity theft is a crime defined by Article 226-4-1 of the Penal Code: the act of identity theft or using one or more pieces of information of any kind that allow for the identification of that person, with the intent to disturb their peace or that of others, or to damage their honor or reputation, is punishable by one year of imprisonment and a fine of 15,000 euros. This offense is punishable by the same penalties when committed on a public online communications network.
OPERATING RULE
Document the error, dispute with the right organization, freeze access where available and keep rebuilding boring.
CURRENT-RULES CHECK
Legal protections, tax rates, reporting duties, deadlines and product rules change by country and over time. Use the jurisdiction labels in this guide and check the linked official source before acting.
- CFPB - Dispute credit report information - United States - dispute process.
- FTC - Free credit freezes are here - United States - security freezes.
- FTC - What to know about identity theft - United States - identity theft response.
