Credit reports are playing an increasingly important role in the lives of Canadians, without them necessarily fully understanding what a credit report is, or how important it is to their lives.
Having a bad credit record can have serious consequences in a consumer's life, for many years to come. It can prevent (or limit) access to credit at reasonable rates. It can also cause problems when looking for a new home or a new job, or when obtaining damage insurance.
A creditor who claims that a consumer owes him a sum of money can enter a negative note on the consumer's credit file. This inscription gives the creditor the power to sanction the consumer without having to prove the merits of the claim in a court of law. This situation raises ethical questions, since the creditor controls the information disseminated, and in a way becomes judge and jury.
Entering a bad mark in a credit file reverses the burden of proof. Here, even if it's the creditor who claims to have a right - the right to claim what's owed to him or her - if the entry is false, erroneous, incomplete or contentious (which happens all the time), it's up to the consumer to prove it. To avoid the hassle of a bad mark on a credit file, a consumer can of course decide to pay the amount claimed under protest and then sue the creditor. But here again, the burden of proof is reversed.
Certainly, privacy laws impose certain rules and guidelines regarding the accuracy of information in credit files, and provide consumers with the right to have information rectified and explanatory notes added to their files. But we wonder about the effectiveness of these measures. Can an explanatory note mitigate the negative perception generated by a poor rating? Is it taken into account when calculating the credit score?
In this research, we wanted to examine the effectiveness of existing rules and assess whether they adequately protect the consumer.
