How Long Do Collections Stay On Your Credit Report in Canada?

Even after a debt is paid and reported correctly, it will remain on your credit report for a set period—typically around six years in Canada.

A debt collection usually stays on your credit report for six years in Canada, regardless if it has been paid off or not. Equifax counts this period starting from the date of your last payment, while TransUnion starts from the date the debt became delinquent.
I understand how frustrating this can be. After all, you've worked hard to clear that debt, and seeing it linger on your credit report can be disheartening. However, as time goes by, its impact on your credit score lessens, especially as you continue to build a positive credit history.

Can Collections Be Removed From Your Credit Report?

First, it's important to understand that credit reports are historical documents that reflect the history of your credit accounts. It shows both positive information (ex. active and paid accounts) and negative information such as late payments and debt collections reported by your creditors to the credit bureaus.

Paying off a debt collection will not remove it from your credit report but will usually show up as "paid". Despite being listed, a paid debt is better for your creditworthiness than an outstanding collection. That’s because payment history is a significant factor in credit score and showing that you've resolved past debts works in your favour.

Sometimes, credit reports might contain inaccurate information due to mismatched data or outdated details. This could include account details, amounts, or dates. If this happens, you can file a dispute with Equifax and TransUnion in Canada who are obligated to investigate the matter. Should the information be incorrect, the credit bureau will remove the erroneous entry from your credit report.

Do Unpaid Collections Go Away in Canada?

Similarly, unpaid collections will be removed from your credit report in Canada after six years. But this doesn’t mean the actual debt goes away. Lenders and debt collection agencies could still pursue repayment after this period, depending on provincial laws. It’s best to deal with unpaid debt as soon as possible to stop ongoing collection efforts and reduce the risk of legal action.
If managing your debt feels overwhelming, consider consulting a credit counsellor or financial advisor to find the best approach for your situation. They can create a personalized plan to tackle your debt through options like debt consolidation, negotiating a settlement, and developing a debt management plan.

Rebuilding Credit With Collections on Your Report

Having a debt collection on your credit report doesn't define your financial future. The good news is that you can recover from bad credit and build it back eventually. For now, it’s time to focus on taking proactive steps:

• Make on-time payments: Consistently paying your current bills (credit cards, loans, and utilities) demonstrates responsible credit management and will help increase your credit score over time.
  
• Review your report regularly: Watch out for any errors or inaccuracies that could negatively affect your score. If you find any discrepancies, dispute them with the credit bureaus promptly.
  
• Stick to good financial habits: Creating and following a budget helps you avoid unnecessary debt and allows you to manage your finances effectively.

At Parachute, we understand that overcoming debt hurdles is more than just getting back to a zero balance—it's about working towards a brighter financial future. That's why our debt consolidation services are designed to leave you with improved cash flow, interest rates, and credit score by the end of your term. 

If you’re struggling with high-interest debt or collections, reach out to us at Parachute to see how we can help.

Related articles:

How Long Can A Debt Be Collected In Ontario?
How To Dispute A Collection On Your Credit Report