Many individuals
who have an R9 on their credit report will often reference their credit as ‘R9
credit’, as though R9 is the credit rating.
Credit reports have
an over-all rating. This is a number between 300 and 900. This rating is
calculated based on everything that is listed on your credit report. 300
represents a poor rating and 900 represents the best rating. When you request
your credit report this “score” is called a FICO score. When a lender requests
your credit report they see the same score – this is called the “Beacon score”.
A Beacon score and a FICO score are the same thing. R9 credit is not your
overall credit score, although it will reduce it.
What is R9 credit?
The letter R stands for revolving and the 9 represents a “bad debt write off”
so an R9 credit score is a credit card, line of credit, store card or some
other form of revolving credit that has gone into default. If you do not make a
payment on a revolving credit product for 6 months your individual rating for
that credit product will become an R9.
An R9 will remain
on your credit report for 7 years from the date of last activity (this is the
last date that you made a payment on the credit). Many people think that
somehow R9 credit magically disappears after 7 years but it is important to
note that it is 7 years from the date of last activity and it won't necessarily
go away on its own. This is a very common credit report error that many people
end up spending many months to resolve.
R9 credit can be
resolved in one of a few ways:
1. You can pay the debt in full – the R9 credit
should be removed 7 years from the date the debt has been paid in full.
2. You can make a settlement on the debt with your
creditor(s) – the R9 credit should be removed from your credit 7 years from the
date it is reported as settled.
a. Settlements must be documented, including proof
of settlement being accepted by your creditor and proof of payment.
b. Equifax must be independently notified of the
settlement.
c. You must follow up to ensure that the
settlement has been reported to your credit report.
3. If you go to credit counselling, the R9 credit
will turn into an R7 credit and the R7 will be removed from your credit report
3 years from the date the credit counselling plan is paid in full.
4. If you file a consumer proposal the R9 credit
will be removed from your credit 6 years from the date it is paid in full –
make sure when you file a consumer proposal that you independently send proof
of the consumer proposal to Equifax.
5. A bankruptcy – the R9 credit will be removed
from your credit 6 years from the date the bankruptcy is discharged – make sure
when you file a bankruptcy that you independently send proof of the
bankruptcy to Equifax.
6. R9 credit can also be removed 7 years from the
date of last activity if that was the last time a payment was made on the
credit product. This is in no way a slam dunk – often creditors will continue
to report activity to the credit report even after there hasn’t been any. Also,
if the account is purchased by a collection agency, this can become extremely
complex.
Having R9 credit on your credit report is not
great – but it isn’t the end of the world either. There are ways to not only
work to have the R9 removed but also to correct any other bad credit to help
rebuild your credit score. Speaking with a financial consultant skilled in
dealing with R9 credit is a smart practice.
If you have R9
credit and need help please contact DebtCare by calling 1-888-890-0888 or visit
www.debtcare.ca.
