No Quick Fix to Repairing Credit
Ontario government warns consumers to be wary of CREDIT REPAIR companies promising more than they can deliver
"Credit Problems? No Problem! We can erase your bad credit - guaranteed."
Credit repair companies claim to improve
consumers' poor credit ratings, but the Ontario Ministry of
Consumer and Business Services warns consumers to be wary of
advertisements promising to "fix" bad credit.
In reality, this is rarely possible," says Minister of Consumer and Business Services Norm Sterling. "Consumers may be charged steep fees - as much as $1000 - by companies that do not improve the client's credit rating in any way at all." Such unfair practices have become illegal in Ontario following changes to the Consumer Reporting Act, which took effect December 6, 2000.
It is now against the law for credit repairers to accept
advance payment, or to charge a fee at all unless their
services demonstrably improve the consumer's credit file. For
example, if an account owed by one consumer appeared on the
wrong person's credit file, a correction of that information
achieved through the efforts of the credit repair company
would be a "demonstrable improvement."
Credit repairers must also provide the consumer with a written, dated contract. Having signed the contract, the consumer may choose to cancel it for any reason within a five-day cooling-off period. Consumers who made advance payments to credit repairers after December 6, 2000, when the changes to the legislation took effect, can demand a refund.
If the company fails to repay the money within five days of receiving a written request, the consumer can take the company to court. In addition to ordering repayment, the court now has the authority to order exemplary or punitive damages. Ads for credit repair companies, often appearing on television, in newspapers and on public transit buses and trains, may promise to fix poor credit ratings quickly.
It is now illegal for credit repairers to make false or misleading claims. In reality, no credit repairer has the power to change or erase accurate information in a consumer's file. Consumers should check their credit files every two years to ensure the information is correct.
To get started, send a written request to one of the two major credit bureaus in Canada.
(or Editor's Note - get your online Canadian credit report inexpensively and immediately for as low as $13.95).
A credit bureau (also known as a credit reporting agency)
is a private institution regulated by provincial law that keep
records of how well individual consumers handle credit. With
the consumer's consent, credit-granting firms, such as banks
and retail stores, can access this information to decide
whether or not an applicant is a good credit risk.
Generally, a person's credit file contains a listing of debit and credit payments and it includes public record information about how promptly people pay their bills, collections, judgments and bankruptcies. Lenders update this mainly computerized information monthly.
The credit bureau itself does not refuse loan applications.
Financial institutions such as banks and other credit grantors
follow their own systems for deciding whether or not to grant
credit. For example, a lender may refuse a loan application
because the credit bureau's records indicate that the consumer
has outstanding loans with several other companies. If credit
is refused, the consumer is directed to a credit bureau to
review the information that contributed to the decision.
If you question an item on the file, the credit bureau will
investigate on your behalf to verify the status of the entry.
If an error is found, the credit bureau is obliged to correct
it. The consumer should present official receipts to the
bureau when updating balances. If it is a major correction,
the credit bureau will send copies of the updated file to
credit grantors upon request.
In most situations, credit history on the consumer's credit file can be reported for seven years, except for multiple bankruptcies, which can be reported longer than seven years. The type of information contained in credit records is regulated. Personal information, such as race, religion, medical or criminal history, is strictly prohibited.
Firms may ask to check your credit record only if you apply
for credit, or for information to help with debt collection,
tenancy agreements and employment or insurance purposes.
Disclosure of the information contained in a consumer report
is restricted to a number of purposes set out in the Act. In
most circumstances, consumers must be notified when
information in their reports is disclosed.
"We have tightened the rules on how credit repair
companies operate and given consumers new rights," says
Sterling. "But be aware that the only sure way to improve
a poor credit rating is to work with creditors and show that
your payment habits have improved."
Many credit grantors will help work out payment plans to the satisfaction of both consumers and businesses. Non-profit credit counseling services are also available to help people control their debts and solve financial problems permanently. These services are available through the member agencies of the Ontario Association of Credit Counseling Services.
(Editor's Note: One of the best and only ways in Canada to repair your Canadian credit history is responsible use of a secured credit card. You can rebuild your good name within 12-18 months. Not a "quick fix" but a solid reputable long-term solution to repairing your good fiscal name).
To find the agency nearest you, call toll free at 1-888-746-3328 or surf our list.
For more information call the ministry's General Inquiry Unit at 416-326-8555 in the Toronto area, or toll free at 1-800-268-1142 outside of Ontario.
Special equipment is available for people with speech
difficulties or hearing impairment at 416-326-8566.
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