An Ontario court has given a strong incentive for banks and credit reporting
agencies to act faster and more efficiently when a consumer brings attention
to an error in his credit report.
In January 1994, Robert Neil Clark applied for a personal loan with the Royal
Bank of Canada. He learned that he had an R-9 credit rating, dated 1993, due
to unpaid retail debt he allegedly owed to the Bank of Nova Scotia. (R-9 and
I-9 are the worst possible ratings in a credit report.)
Clark then contacted Equifax Canada Inc., a national credit reporting agency
that reports information provided to it by its members. He was assured of an
investigation and correction in case of an error.
From 1994 to 2000, he had difficulties obtaining credit. In the course of
eventually receiving all the loan approvals, various banks often told him of
the R-9 entry on his report.
He also reported repeated communications with both Scotiabank and Equifax over
this matter. Finally, in 2000, Equifax confirmed that the delinquent loan was
not against Clark, but another person with a similar first and last name but a
different middle name.
Clark sued Scotiabank, which reported the R-9 rating in the first place, and
Equifax, on the grounds that the continuing misrepresentation of his credit
had affected his life and that he had suffered serious depression as a result.
He argued that the Scotiabank and Equifax were negligent in their duties and
were liable for his psychological problems.
In June, Justice Gerald F. Day of the Ontario Superior Court ruled in favour
of Clark. Quoting an earlier Ontario court decision, he wrote that if
credit-reporting agencies are negligent in gathering and reporting
information, and if their report is inaccurate, their actions could cause
creditors to either deny credit or charge more than usual.
Pointing to the importance of credit and credit ratings in our society, he
said credit reporters had to be accurate, skilled and diligent.
Justice Day ruled that Scotiabank and Equifax failed to take reasonable care
with Clark's credit rating. Equifax did nothing for many years, he wrote.
Scotiabank admitted its failure, and although Equifax could not be blamed for
supplying information provided by the bank, it could be faulted for not
responding to the plaintiff's repeated requests for clarification over several
Clark claimed damages for distress and loss of financial reputation as a
result of the actions of Scotiabank and Equifax, but was unable to prove
actual monetary loss. Instead, the judge awarded him $5,000 against each
defendant for intrusion on the financial integrity he is entitled to enjoy.
The Clark case, one hopes, will serve as a strong incentive for financial
institutions and credit reporting agencies to be more responsive when
consumers ask for corrections to their credit history.
Those with correct but poor credit ratings, however, should be aware that the
only sure way to improve a rating is to work with creditors to show that
payment habits have improved. Non-profit credit counselling services are
available to help borrowers control their debts and solve financial problems
These services are available through member agencies of the Ontario
Association of Credit Counselling Services at 1-888-746-3328, or at
Ontario's Ministry of Consumer and Business Services says consumers should be
wary of companies with advertisements on the lines of: Credit problems? No
problem! Or, Erase bad credit guaranteed.
Credit repair companies may charge as much as $1,000 but do not improve the
clients' credit rating. In fact, no one can legally remove accurate and timely
negative information from a credit report.
Under changes made to Ontario's Consumer Reporting Act in December, 2000, it
is now illegal for credit repairers to accept advance payment, or to charge a
fee at all, unless their services demonstrably improve the consumer's credit
Bob Aaron is a Toronto real estate lawyer. He can be reached by e-mail at email@example.com,
phone 416-364-9366 or fax 416-364-3818. Visit http://www.aaron.ca