Appearance before the Standing Committee on Finance (July 7, 2020): Credit reporting during pandemic

Issue

FCAC became aware that some banks indicated they could face challenges in accurately reporting deferrals for mortgages, credit cards and other credit products due to system limitations. This caused concern that deferrals could be reported to credit bureaus as delinquent, with direct negative impacts on consumers' credit files.

Background

• FCAC learned of this issue through its regular communications with regulated entities.
• Delinquencies have negative consequences for consumers’ credit scores and their ability to qualify for financing, rental housing, employment opportunities and discounted insurance premiums.
• The credit reporting industry is under provincial jurisdiction; FCAC provides consumer-facing information on credit reporting under its education mandate.

Data/Quick facts

• As part of its role to protect financial consumers, FCAC communicated its expectation that the reporting of relief measures by financial institutions to credit rating bureaus should be done in such a way as to have no negative effect on an individual’s credit score.
• FCAC has met both Equifax and TransUnion and has also communicated informally with many provincial regulators regarding this issue. Based on these discussions, it is the Agency’s understanding that both credit bureaus have taken steps to minimize the effects of the COVID-19 pandemic on consumers’ credit standing and provided related information to consumers on their websites.

Key messages

• FCAC does not oversee credit bureaus or how they use the data that they receive from banks, as credit bureaus are regulated at the provincial level.
• FCAC has communicated its expectation that the reporting of relief measures by financial institutions to credit rating bureaus should be done in such a way as to have no negative effect on an individual’s credit score.
• To help consumers better understand their credit reports, FCAC provides online resources with tips and information on how they can improve their credit score, correct errors and order their credit report, which should be consulted regularly for accuracy.