How Long Does Bad Credit Stay on Your Record?

Mistakes happen, especially with finances. A missed or late payment can stain your credit report, but how long does bad credit stay on your record?

If your credit score has taken a hit and you’re on a plan to clear your debts, how long before your score recovers enough for you to qualify for a mortgage or other loans?

In Canada, two credit bureaus, Equifax Canada and TransUnion Canada, keep your credit history. Lenders rely on one or both to assess your eligibility and terms. The retention periods below follow the Financial Consumer Agency of Canada’s guide, what’s on your credit report and how long it stays there. Each bureau sets its own rules and can change them, so check your own reports (they’re free from both bureaus) for the exact dates on your file.

How long does negative information stay on a Canadian credit report?

Most negative information, such as late or missed payments and accounts sent to collections, stays on your credit report for up to 6 years. Consumer proposals, bankruptcies and some court judgments follow their own timelines, set out below.

Late or missed payments

Late and missed payments on credit cards, lines of credit and loans stay on your report for up to 6 years at both Equifax and TransUnion.

Collections

A debt that has been sent to a collection agency also stays on your report for up to 6 years.

Court judgments

Judgments generally stay for 6 years. TransUnion keeps them for 7 years in Newfoundland and Labrador, Ontario and Quebec, and for 10 years in Prince Edward Island.

Debt management plans

If you repay debts through a debt management plan with a credit counselling agency, the plan stays on your report for 2 years after you finish paying off the debts.

How long does a consumer proposal stay on your credit report?

A consumer proposal stays on your report for 3 years after you’ve paid off all the debts included in the proposal, or 6 years after you sign it, whichever comes first.

How long does a bankruptcy stay on your credit report?

A first bankruptcy generally stays for 6 years after you’re discharged (7 years at TransUnion in some provinces). If you’ve declared bankruptcy more than once, each one stays for 14 years.

Do credit inquiries stay on your report?

Yes. A “hard” inquiry, made when you apply for credit such as a mortgage, stays on your file for about 3 years at Equifax and up to 6 years at TransUnion, according to the FCAC. The effect on your score is small and fades within months. Checking your own credit is a “soft” inquiry and doesn’t affect your score.

Positive Information

On-time payments and well-managed accounts help your score. Equifax keeps closed accounts that were paid in full for up to 10 years, and TransUnion keeps positive information for up to 20 years, so good habits keep working for you long after bad marks drop off.

What this means for a mortgage

You don’t have to wait for every negative item to disappear before you can buy or refinance. Lenders look at how recent the problems are and what you’ve done since: several years of on-time payments after a missed payment, or a completed consumer proposal with re-established credit, can be enough for some lenders. Where a bank says no, B-lenders and private lenders may still approve you at a higher cost while you rebuild. See our guide to bad credit mortgages for how that works.

A poor credit score can also make it harder to rent a home or get a cell phone plan. By managing your credit and correcting errors promptly (you can dispute errors directly with each bureau), you can rebuild your credit and open doors to better financial options.

Talk to a mortgage agent

Mortgage Squad Advisors can review your credit report with you and tell you which lenders are likely to approve you today. Contact us to talk through your options.