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Government Of Canada Everything you need to know about credit Page 2

Understanding your credit report and credit score


Overview

Building a good credit history is important for your financial health.

Along with millions of other Canadians, you have a credit history that is kept on file by companies called credit reporting agencies. They track how you use credit products, such as credit cards and loans, and pay your bills.

This information is used to create your credit report and credit score. These are some of the main tools lenders use when they decide whether they will lend you money and how much they will charge you to borrow it. Employers and landlords may also use credit reports to get a sense of your reliability.

You have the right to see your own credit report. And there are ways you can get it for free.

Knowing what is in your report is important. If you have a poor credit history, it could be harder for you to get a credit card or a loan. You could have to pay more to borrow money. It could even affect your ability to rent housing or get hired for a job.

You can also use your credit report to check for signs of identity theft.

This guide can help you:

  • understand your credit report and score
  • improve your credit score
  • correct errors in your credit report
  • order your credit report and score.
 

Your credit report is a summary of your credit history. If you have ever used a credit card, taken out a personal loan, or used a “buy now, pay later” offer, you have a credit history.

Your credit report is created when you borrow money or apply for credit for the first time. Lenders send information about your accounts to the credit reporting agencies. Your credit report also includes personal information that is available in public records, such as a bankruptcy.

Your credit report contains factual information about your credit cards and loans, such as:

  • when you opened your account
  • how much you owe
  • whether you make your payments on time
  • whether you miss payments
  • whether you go over your credit limit.

Mobile phone and Internet accounts may be reported, even though they are not credit accounts.

Chequing and savings accounts that have been closed “for cause,” due to money owing or fraud committed by the account holder, can also be included.

A credit score is a three-digit number that is calculated using a mathematical formula based on the information in your credit report. You get points for actions that demonstrate to lenders that you can use credit responsibly. You lose points for things that show you have difficulty managing credit. To find out what counts toward your credit score, see the section called “How to improve your credit score”.

In Canada, credit scores range from 300 to 900 points. The best score is 900 points.

Lenders and credit reporting agencies produce credit scores under different brand names, such as Beacon, Empirica and FICO®.

Your score will change over time as your credit report is updated.

Businesses use your credit report and score to see how risky it would be for them to lend you money. It is up to each lender to decide on the lowest score you can have and still borrow money from them. Lenders may also use your score to set your interest rate and credit limit. If you have a high credit score, you may be able to get a lower interest rate on loans, which can save you a lot of money over time.

While they are very important, credit scores are usually not the only thing a lender will look at. Often, they will also consider other factors, such as your income, job or any assets you own.

 
  Why might the credit score I receive be different from one a lender is using?

A credit score you order for yourself may not be the same as a score produced for a lender.

This can happen even if they are created at the same time using the same information in your credit report because there are different types of credit scores that are designed to meet the needs of lenders.

A lender may put more weight on certain information depending on the reason it is calculating your score. For example, it may want to assess your risk of becoming bankrupt or determine whether you qualify for a mortgage.

Your own credit score should still be in the same range as a score created for a lender.

 

 

Credit reporting agencies are private companies that collect, store and share information about how you use credit. An agency is also called a “credit bureau” or just a “bureau.”

These agencies are governed by regulations that cover many parts of their business, such as who is allowed to see your credit report and what it can be used for.

In Canada, there are two main credit reporting agencies: Equifax Canada and TransUnion Canada.

These agencies sell credit reports to their members, which include banks, credit unions and other financial institutions, credit card companies, auto leasing companies and retailers. These businesses use your credit report to help them make their decisions about you.

Other organizations also use it to check your use of credit and personal trustworthiness. Those allowed to use your credit report include mobile phone companies, insurance companies, governments, employers and landlords.

When a lender or other organization “checks your credit” or “pulls your report,” it is accessing your credit report at the credit reporting agency. This is usually recorded on your credit report as an “inquiry.”

Lenders provide the information in your credit report to the credit reporting agencies. Other sources of information include collection agencies, offices that handle child support and public records filed with courthouses.

 

Take credit for your actions!
 
Do you have a strong credit score? Use this to your advantage when you negotiate for a loan. Point out that you represent a lower risk to the lender and ask for a lower interest rate or better terms.
 
 


 

There are regulations in place to protect your personal information, including your credit report. Usually, your credit report can only be used to:

  • lend money or extend credit to you
  • collect on a debt you owe
  • consider you for rental housing or for a job
  • provide you with insurance (some provinces have restrictions)
  • meet a direct business need.

Lenders, employers or landlords can only use your credit report when you give your consent or, in some provinces (including Nova Scotia, Ontario, Quebec, Prince Edward Island and Saskatchewan), after they tell you they will be checking your report.

Usually, when you sign an application for credit, you allow the lender to access your credit report. Your consent generally lets the lender use your credit report when you first apply and anytime afterward while your account is open.

In many cases, your consent also lets the lender share information about you with the credit reporting agencies if your application is approved.

Some provincial laws permit government representatives, including judges and police, to see parts of your credit report without your consent.

In some provinces, your credit score cannot be used to decide whether you qualify for insurance or to determine how much you will be charged for insurance coverage. In some cases, insurers are not allowed to use your credit score when deciding whether to offer you specific types of coverage, such as auto or mortgage insurance.

Some provinces require lenders and others to tell you if your credit report led to you being refused for a benefit or service, or if you have to pay more for it.

For more information about provincial and territorial laws, contact the government office that handles consumer affairs in your area.



































































What is in my credit report?

Your credit report may contain the following information:

Personal information

  • Name
  • Date of birth
  • Current and previous addresses
  • Current and previous telephone numbers
  • Social insurance number (SIN)
  • Driver’s licence
  • Passport number
  • Current and previous employers

Credit history information

  • Credit accounts and transactions, such as credit cards, retail or store cards, lines of credit and loans
  • Telecommunications accounts, such as mobile phone and Internet
  • Negative banking information, such as chequing and savings accounts closed “for cause,” due to money owing or fraud committed by the account holder, and bad cheques (also called non-sufficient funds or NSF cheques)
  • Public records, such as bankruptcy and legal judgments, and registered items, such as a lien on a car or house that allows the lender to seize it if you do not make payments
  • Debts sent to collection agencies
  • Inquiries from lenders and others who request your credit report
  • Remarks including consumer statements, fraud alerts and identity verification alerts.

Is my mortgage included in my credit report?

Your mortgage information and your history of mortgage payments may appear in your credit report and may count toward your credit score. This depends on the practices of each credit reporting agency.

A home equity line of credit that is added to your mortgage will be treated as part of your mortgage for your credit report. If your home equity line of credit is a separate account from your mortgage, it can be reported separately.



By law, negative information can only be kept on your credit report for a certain length of time. For most information, the maximum is six or seven years. The exact amount of time varies by category and by province or territory. Positive information, such as accounts that you paid on time, may be kept longer.

Equifax Canada and TransUnion Canada keep your information for different lengths of time, up to the maximum time limits allowed by provincial laws.

Type of information​ How long agencies keep information​ Date when agencies start counting​
Credit transactions
  • Negative information about accounts such as credit cards, lines of credit and loans
  • Also called “trades” or “trade lines” by credit reporting agencies
  • 6 years
 

 

  • Equifax counts from date of last activity (for example, a payment you made)
  • TransUnion counts from date of first delinquency—the date you first defaulted on the account (for example, by making a late payment) without returning to good standing

Secured loans 

  • Loans backed by an asset, such as a mortgage, a car lease or loan
  • 6 years
  • Equifax only: 7–10 years in P.E.I.
  • Equifax counts from date of filing
  • TransUnion counts from date of first delinquency

Banking items 

  • Negative information, including:
    • chequing and savings accounts closed “for cause” due to money owing or fraud committed by the account holder
    • bad cheques (also called non-sufficient funds or NSF)

 

  • 6 years
  • Equifax counts from date of transaction or default
  • TransUnion counts from date of write-off or date closed, whichever is sooner

Inquiries

  • Equifax: 3 years
  • TransUnion: 6 years
  • Counted from date inquiry is made






Top of page

 

Type of information​ How long agencies keep information Date when agencies start counting​

Judgments

  • Legal judgments against you and other information in public records
  • 6 years
  • Equifax: 7–10 years in P.E.I.
  • TransUnion: 7 years in Ontario, Quebec, New Brunswick and Newfoundland and Labrador; 10 years in P.E.I
  • Counted from date of filing

Collections

  • Debts sent to collection agencies
  • 6 years
  • Equifax counts from date the debt is assigned to a collection agency
  • TransUnion counts from date of first delinquency (when the account became delinquent with the original lender, not when it was sent to a collection agency)

Registered items 

  • Items registered in public records, such as a lien against your property

 

  • Equifax: 6 years,
    except in P.E.I. where it is 7–10 years
  • TransUnion: 5 years
  • Counted from date of filing

Bankruptcy 

  • Legal procedure used as a last resort if you are unable to repay your debts

 

  • 6 years
  • TransUnion only: 7 years in Ontario, Quebec, New Brunswick, Newfoundland and Labrador, and P.E.I
  • Counted from date of discharge.
  • If not discharged:
    • Equifax keeps for maximum of 7 years from filing date
    • TransUnion: no time limit

Multiple bankruptcies 

  • Legal procedure used as a last resort if you are unable to repay your debts
  •  14 years

 

  • Counted from date of discharge for each bankruptcy

Top of page

 

Type of information​ How long agencies keep information​ Date when agencies start counting​

Consumer proposals

  • Formal procedure to repay your debts, arranged by trustee in bankruptcy or other authorized agent
  • 3 years
  • Equifax counts from date paid.
  • TransUnion counts from date satisfied or 6 years from filing date, whichever is sooner
  • If not paid or satisfied, maximum is 6 years from filing date

Orderly payment of debts (OPD) 

  • Also known as a consolidation order
  • Formal procedure to repay your debts, arranged through a court
  • Only available in Alberta, Saskatchewan and Nova Scotia
  • Equifax: 3 years
  • TransUnion: OPD itself is not reported
  • Equifax counts from date paid
  • TransUnion: individual accounts included in OPD stay on file for 2 years from date OPD is satisfied or 6 years from date of first delinquency, whichever is sooner

Debt management program (DMP) with credit counselling agency 

  • Program to help you repay your debts

    Note: credit counselling by itself (without DMP) is not noted on your credit report

 

  • Equifax: 3 years
  • TransUnion: DMP itself is not reported
  • Equifax counts from date paid. If not paid, counts for a maximum of 6 years from filing date
  • TransUnion: individual accounts included in DMP stay on file for 2 years from date DMP is satisfied or 6 years from date of first delinquency, whichever is sooner

Remarks 

  • Statements you can add to your credit report, including:
    • consumer statements
    • fraud alerts
    • identity verification alerts.
  • 6 years
  • Counts from date reported to agency

 

How are my debts rated on my credit report?

Lenders may use codes when they send information to the credit reporting agencies about how and when you make your payments. These codes can have two parts: a letter and a number. For example, an account may be coded as R2. The letter stands for the type of the credit you are using.

Letter​ Meaning​ Example​


I

Installment credit
You borrow money for a specific period of time and repay it in fixed amounts, on a regular basis, until the loan is paid off.
  • Car loan


O

Open status credit
You can borrow money when you need to, up to a certain limit.
  • Line of credit

 
R

Revolving or recurring credit
You can borrow money up to your credit limit on an ongoing basis. You make regular payments in varying amounts depending on the balance of your account.
  • Credit card

 

M

Mortgage loan
Mortgage information may be included on your credit report.
  • Mortgage

The codes also use numbers that range from 1 to 9. The best rating is 1. It means you pay your bills within 30 days of the billing date. Ratings of 1 will help you achieve a strong credit score.

Any number higher than 1 will likely hurt your credit score. The worst rating you can receive is 9. It usually means the lender has written your account off or sent it to a collection agency.

Number​   Meaning
0
  • Too new to rate
  • Approved, but not yet used​
1
  • Paid within 30 days of billing
  • Pays as agreed​
2
  • Late payment: 31–59 days late​
3
  • Late payment: 60–89 days late​
4
  • Late payment: 90–119 days late​
5
  • Late payment: more than 120 days late, but not yet rated “9”​
6
  • This code is not used​

7

  • Making regular payments under a consolidation order, orderly payment of debts, consumer proposal or debt management program with a credit counselling agency​
8
  • Repossession​

 

9

  • Written off as a “bad debt”
  • Sent to collection agency
  • Bankruptcy​
 

Each of your credit accounts will have one of these codes. The codes can be different depending on how you make your payments for each account.

For example, if you have a credit card account that you paid on time, it will be reported as “R1.” If you also have a line of credit, and you missed your payment by 45 days, it would show up as “O2.”

TransUnion Canada also uses a chart to show your history of payments over the last two years. For an example, see the sample credit report from TransUnion Canada.

It is important to begin building your credit history early. If you do not have a credit history, it is much harder for lenders to make a decision about you, since they have nothing to base it on.

One of the best ways to build a credit history is to apply for a credit card and make your payments on time.

It can sometimes be hard to get a regular credit card if you are a young person, a recent immigrant or have had trouble with credit in the past.

An option is to apply for a secured credit card. You need to provide the credit card issuer with a deposit. Usually, the amount required for a deposit is equal to the credit limit for the credit card. When you make payments on the balance of a secured credit card, it will be reported to the credit reporting agencies in the same way as a regular credit card. This can help you build a credit history or rebuild a poor one.

 

Are secured credit cards and prepaid cards the same thing? 

No, they are not the same. A secured credit card can help you establish a credit history. However, a prepaid card will not help you build a credit history because your use of it is not reported to the credit reporting agencies.

 

How to improve your credit score

The actual formulas used to calculate credit scores are the property of private companies and are not available to the public. This means it is not possible to know exactly how many points your score will go up or down based on the actions you take.

However, the main factors that are used to calculate your score include:
 

This is the most important factor for your credit score. It shows:

  • when you paid your bills
  • late or missed payments
  • debts you did not pay that were written off or sent to a collection agency
  • whether you have declared bankruptcy.

Your score will be damaged if you:

  • make late payments—the longer it takes you to make your payment, the worse the impact on your credit report and score will likely be
  • have accounts that are sent to a collection agency
  • declare bankruptcy
  • withhold payments due to a dispute and the lender reports your payments as late.

With certain financial products, any payments you make on time will not be counted and will not improve your credit score. However, if you miss payments and your account is sent to a collection agency, this can be included and will damage your credit score. These products include:

  • chequing and savings accounts
  • student loans
  • prepaid cards (these are not the same as secured credit cards).

Telecommunications accounts, such as mobile phone and Internet, are exceptions. Payments you make on time as well as late payments may be considered for your credit score.
 

Tips to improve your credit score 

Always make your payments on time. If you cannot pay the full amount, make at least the minimum payment. 

If you think you will have trouble paying a bill, contact the lender right away. See if you can work out a special arrangement to repay your debt.

This is the second most important factor. It is also called “credit utilization.”

To figure out your available credit, add up the credit limits for all your credit products, such as credit cards, lines of credit and other loans.

What counts toward your credit score is how much of your available credit you actually use, not your credit limits by themselves.

When you use a large percentage of your available credit, lenders see you as a greater risk, even if you pay your balance in full by the due date.

Tip to improve your credit score

Try to use less than 35 percent of your available credit.

For example, if you have a credit card with a limit of $5,000 and a line of credit with a limit of $10,000, your available credit is $15,000. Try not to borrow more than $5,250 at any time (35 percent of $15,000).

 

The longer you have had an account open and used it, the better it is for your score.

Your credit score may be lower if:

  • you have credit accounts that are relatively new
  • you close your older accounts and your remaining credit accounts are newer—for example, if you close a credit card account and transfer the balance to a new card.

Tip to improve your credit score

Consider keeping an older account open even if you no longer need to use it, especially if there is no annual fee. Use it from time to time to keep it active.

When lenders and others ask a credit reporting agency for your credit report, it is recorded as an inquiry. This usually happens when you apply for credit.

It is normal and expected to seek credit every so often. But if there are too many inquiries on your credit report, lenders may be concerned. It can seem like you are desperately seeking credit or that you are trying to live beyond your means without the ability to pay back the money you want to borrow.

“Hard hits” versus “soft hits”

Inquiries that are recorded on your credit report and count toward your credit score are sometimes called “hard hits.” Anyone who views your credit report will see these inquiries. An application for a credit card is an example of a “hard hit.” Rental and employment applications may be treated as “hard hits.”

“Soft hits” are the opposite. Only you can see “soft hits.” These inquiries do not affect your credit score in any way. Examples of “soft hits” include:

  • requesting your own credit report
  • businesses asking for your credit report to update their records about an existing account you have with them. They do this to see whether you qualify for promotions, credit limit increases and so on.

Will shopping around for a car or mortgage hurt my score?

When you are shopping around for a car or a mortgage, try to do it within a two-week period. All inquiries related to auto or mortgage loans made during this time are usually combined and treated as a single inquiry.

   

Tip to improve your credit score

Limit the number of times you apply for credit in a short period of time. It is a good idea to seek credit only when you really need it.

 

Your score may be lower if you only have one type of credit product, such as a credit card.

It is better to have a mix of different types of credit, such as a credit card, auto loan, line of credit or other loan. It can even help if you have a second but different type of credit card, such as an account with a store.

 

Tip to improve your credit score

Having a mix of credit products could get you more points, but don’t go overboard! Make sure you can afford to pay back any money you borrow. Otherwise, you could end up hurting your score by taking on more debt than you can handle.
 

How to correct errors and check for fraud


Check your credit report at least once a year for errors and signs of identity theft. Think of it as an annual checkup for your financial health!

You have the right to dispute any information on your credit report that you believe is wrong.

You can ask the credit reporting agencies to correct errors. It’s free.

Watch out for:

  • mistakes in your personal information, such as wrong mailing addresses or incorrect date of birth
  • errors in credit card and loan accounts, such as a payment you made on time that is shown as late
  • negative information about your accounts that is still listed after the maximum number of years it is allowed to stay on your report
  • accounts listed that you never opened yourself, which could be a sign of identity theft.

Why do errors matter?

They may give lenders the wrong impression. You could be turned down for an application or receive a lower credit score than you should have. Even errors that seem minor, such as a misspelled name or a wrong address, could cause problems when you apply for credit.

What cannot be changed?

You cannot change factual, accurate information related to a credit account. For example, if you missed payments on a loan or a credit card, paying the debt in full or closing the account will not remove the negative history. Negative information will only be removed after a certain amount of time.

Watch out for “credit repair” companies that claim they can eliminate negative information, for a fee, before the date it would normally be removed from your credit report. This is not possible.

Steps to correct errors

​Step ​Actions you can take
1. Support your case​

Gather receipts, statements and other documents related to your credit accounts. You may need them to prove your claim.​

2. Contact the credit reporting agencies​

Use their forms for correcting errors and updating information. Do this for both Equifax Canada and TransUnion Canada.

Before the agencies can make any changes, they first need to check your claim with the lender that reported the information.

If the lender agrees there is an error, the agencies will update your file. However, if the lender confirms the information is correct, the agencies will not make any changes.​

3. Contact the lender​

You may be able to speed up the process by contacting the lender yourself about the error. Ask the lender to verify its files and provide the credit reporting agencies with updated information.​

4. Escalate your case​

Not satisfied with the results of the investigation? Ask to speak with someone at a higher level at the credit reporting agency or the lender.

If the lender is a federally regulated financial institution, and it will not correct the error, ask for information on its complaint-handling process.​

5. Add a consumer statement​

If you still are not satisfied, ask the credit reporting agencies to add a consumer statement. This lets you provide details about an item on your credit report, using up to 100 words (or 200 words in Saskatchewan). It’s free of charge.

Lenders and others who review your credit report may consider your consumer statement when they make their decisions.​

 

How can I make a complaint?

If you feel you have not been treated properly by a credit reporting agency, you can make a written complaint to the office of your provincial or territorial government that handles consumer affairs.

 


 

 






























































































































































How to order your credit report and score

You can order your credit report from the credit reporting agencies by mail, fax, telephone, online or in person. You can order your credit score online. Contact information for Equifax Canada and TransUnion Canada is listed below.

Equifax Canada and TransUnion Canada may have different information about you in their files, so you should order your credit report from both agencies at least once a year.

Consider requesting your report from one agency and then waiting six months before you order from the other agency. By spacing out your requests in this way, you may be able to detect any problems sooner. 

Your free credit report is called a “credit file disclosure” by Equifax Canada and a “consumer disclosure” by TransUnion Canada. It does not include your credit score.

To get your credit report free of charge:

  • you may order it by mail, fax, telephone or in person
  • you must receive it by mail or in person.

If you choose to access it online, you will have to pay a fee.

 

To order by mail or fax:

To order by telephone:

  • call the credit reporting agency and follow the automated prompts
  • confirm your identity by answering a series of personal and financial questions and providing your Social Insurance Number (SIN) and/or a credit card number.

To order in person:

  • visit the office of the credit reporting agency
  • show two pieces of acceptable identification. 

Does my free credit report include my credit score?

No, it does not include your credit score. 

If you want to receive your credit report right away, you can pay a fee to get it online.

There is a fee to order your credit score from the credit reporting agencies.

Be wary of other organizations that offer free credit scores. To get the “free” score, you may have to sign up for a paid service. Fraudsters may offer free credit scores in an attempt to get you to share your personal and financial information. 

How can I contact Equifax Canada?

 
   All provinces and territories—Equifax Canada
 
Mail
Equifax Canada
Consumer Relations Department
P.O. Box 190, Station Jean-Talon
Montreal, QC  H1S 2Z2
Phone
(toll-free)
1-800-465-7166
Fax
514-355-8502
In person
Equifax Canada
5700 Yonge St.,
Concourse Level
Toronto, ON  M2M 4K2

How can I contact TransUnion Canada?

 
   All provinces and territories except Quebec—TransUnion Canada
 
Mail
TransUnion Canada
Consumer Relations Centre
P.O. Box 338, LCD 1
Hamilton, ON  L8L 7W2
Phone
(toll-free)
1-800-663-9980
Fax
289-288-0030
In person
Newfoundland and Labrador
Consumer Relations
360 Topsail Rd., Suite 301
St. John’s, NL  A1E 2B6
Nova Scotia
Consumer Relations
Sunnyside Mall
1595 Bedford Hwy, Suite 220 (Mezzanine Level)
Bedford, NS  B4A 3Y4
Ontario
Consumer Relations
3115 Harvester Rd., Suite 201
Burlington, ON  L7N 3N8
Prince Edward Island
Consumer Relations
51 University Ave., Suite 103
Charlottetown, P.E.I.  C1A 4K8
 
   Quebec - TransUnion Canada
 
Mail
TransUnion Canada
Consumer Relations
P.O. Box 1433, Station St-Martin
Laval, QC  H7V 3P7
Phone
(toll-free)
1-877-713-3393
Fax
514-334-8698
In person
TransUnion Canada
1 Place Laval, Suite 370
Laval, QC  H7N 1A1


Examples of credit reports and credit scores 

In this section, you will find examples of credit reports and credit scores from Equifax Canada and TransUnion Canada.

Note: These examples are for illustration purposes only and may not include all information typically provided in a credit report or score. FCAC has modified the presentation for online display. These examples may not appear in exactly the same way as a credit report or score you receive from a credit reporting agency.




What is an RESP?

“RESP” stands for Registered Education Savings Plan. This is an account registered with the federal government to help you save for a child’s post-secondary education. The person who opens the plan is the subscriber—usually, but not always, the parent. The person who will receive money under the plan is the beneficiary—usually, but not always, your child.

You can open an RESP as soon as the child is born. The money in the plan grows tax-free and the government offers special savings incentives. When the child enters a qualified educational program at the post-secondary level, he or she can start drawing on the accumulated savings. Only the child will pay taxes on the money he or she withdraws. Since many students have little or no other income, they usually don’t have to pay much, if any, tax when they withdraw money from their plan.

How does the government help?

  • When you contribute to an RESP, the Government of Canada will contribute as well with a Canada Education Savings Grant. The amount depends on your own contribution and your family circumstances.
  • The government provides more help for families with modest income. This may include an enhanced Canada Education Savings Grant and a Canada Learning Bond.

Who offers RESPs and how can you start one?

  • You can open an RESP at almost any financial institution—including a bank, trust company or credit union—or an investment or scholarship plan dealer.

  • Before you open the RESP, you and the beneficiary both need to have a Social Insurance Number.

  • If you are considering opening an RESP with a federally regulated financial institution, you have the right to be informed about key details before the plan is set up. See Registered products: Your rights and responsibilities.

What are the different types of plans?

You can choose from three types of plans:

Individual plan

For a single beneficiary, who does not have to be a blood relative of the subscriber (the person who opens the plan).

Family plan

For multiple beneficiaries, all of whom must be connected by blood or adoption to the subscriber. A government grant paid into an RESP may be shared among all the beneficiaries. If one beneficiary decides not to continue studies after high school, the other beneficiaries can still use the money.

Group plan

Your savings are pooled with those of other people. The money your child receives is based on the amount of money in the pool and the total number of students of the same age who are in school that year. Usually you have to sign a contract agreeing to make regular contributions to the plan over a set period. Group plans are offered and administered by scholarship or group plan dealers. They may be more expensive than individual or family plans, depending on your investment choices.

Tips for shopping around for an RESP

  • Decide on the type of plan. Choose an individual, family or group plan—whichever suits you best.
  • Check about fees and restrictions. Some RESP providers charge service fees; others do not. Ask the institution to explain any fees, limits, penalties or promises to make regular payments. Also ask about investment and withdrawal options.
  • Make sure you understand all the terms and conditions. Carefully read the information you are given. If you don’t understand something, ask about it.
  • Shop around to find the plan that best suits your needs.
  • Start early to maximize the benefits.

Questions to ask your RESP provider

Here are some of the questions you should ask before you open an RESP.

  • Does it cost anything to open an RESP? 
  • Do I have to put in a minimum amount of money to open an RESP?
  • Once I have opened an RESP, will I have to pay any fees? If so, what are they for and how much must I pay?
  • Do I have to make regular contributions?
  • What happens if I miss a contribution? Do I lose my investment?
  • How can I invest the money that I put into the plan? What are the pros and cons of each investment choice? Can the value of my investments go down?
  • Can I withdraw money if I need it? Are there penalties for early withdrawals?
  • Can I transfer the RESP to another beneficiary or another RESP provider? What is the cost to transfer?
  • What happens if my child does not continue studies after high school?
  • Which educational programs can my savings be used for?
  • What happens if I close my RESP early?
  • Can I switch plans?
  • How long can I keep the plan open?

For more information

For more information about the Canada Education Savings Grant or the Canada Learning Bond, contact the Canada Education Savings Program of Employment and Social Development Canada toll-free at 1-800-O-CANADA (1-800-622-6232), or visit the CanLearn website.

For more information about taxes and RESPs, call the Canada Revenue Agency (CRA) toll-free at 1-800-959-8281 or visit the CRA’s website.

If you have a problem with your RESP plan provider, see FCAC’s FAQ I have a problem with my Registered Education Savings Plan provider. Who can help me?

 


Question:

I have a problem with my Registered Education Savings Plan (RESP) provider. Who can help me?

Answer:

The first step is to try to resolve your complaint directly with your RESP provider. Contact your provider and ask for their written complaints procedure.

If, after following all the steps in the process, you are not satisfied with their response to your complaint, and if your RESP provider is a member of RESP Dealers Association of Canada or a federally regulated financial institution, you can contact the Ombudsman for Banking Services and Investments (OBSI).

OBSI is an independent and impartial dispute resolution service. Its mandate is to resolve disputes between participating banking services and investment firms and their customers when they cannot solve them on their own.

If OBSI does not resolve your complaint to your satisfaction, you may contact the securities commission of your province or territory for possible assistance.

Resource(s):

Classification of this FAQ:

Category Sub-category
Accounts Registered Education Savings Plans (RESPs)
Investments Registered Education Savings Plans (RESPs)


Credit card balance insurance


What is credit card balance insurance?

Credit card balance insurance is a form of insurance for your credit card that can protect you against unexpected events such as a serious injury, disability, accidental death or job loss.

Federally regulated financial institutions, such as banks or trust companies, must obtain your consent before charging you for credit card balance insurance. They cannot charge you for credit card balance insurance if you did not agree to sign up for it.

The financial institution must also provide you with certain information both before and after you provide your consent.

Credit card balance insurance is optional. You are not required to buy it to obtain a credit card.

Learn more about negative option billing and your rights.
 

How credit card balance insurance protects you

Credit card balance insurance is usually a combination of several insurance products, including critical illness, disability, job loss and life insurance.

  • If you become injured, disabled or lose your job, the insurance company will make the minimum payments or pay a certain percentage monthly—usually 3 to 5 percent—of the balance on your credit card for you.
  • If you die or have a critical illness, the insurance company will pay off the credit card balance owing at the time of your illness or death, up to a maximum amount.

The credit card issuer is the beneficiary of any credit card balance life insurance policy. The death benefit is paid to the credit card issuer to pay off your credit card debt.

You would need to buy a separate life insurance policy if you want your family or heir(s) to receive a death benefit in the event of your death.

The benefits apply to the specific credit card for which you agree to purchase the insurance.

If you have other credit cards, those would not be covered unless you purchase credit card balance insurance for each of them separately.


Terms and conditions

In order to qualify, your account must be in good standing. This means that you must:

  • not be over your credit limit
  • not have any past due payments owing
  • not have any recent dishonoured payments to your account.

In addition, the following terms and conditions usually apply to:

Disability or job loss claims

  • In some cases, the insurance company may only make your payments for a limited period of time or until a maximum benefit is reached. Policies vary, but the maximum benefit is usually between $5,000 and $25,000.
  • At the time of your injury, disability or job loss, you must have been permanently employed for a minimum number of hours per week (usually at least 20).
  • If you are a self-employed or seasonal employee, review the policy carefully to find out whether you are eligible for coverage.
  • In some cases there may be a waiting period. For example:
    • You may need to have the coverage for a period of time—usually 30 to 90 days—before you can submit a disability or job loss claim.
    • If the insurer approves your job loss or disability claim, it may begin making payments on your credit card balance only after you have been disabled or unemployed for a certain amount of time—usually 30 days.

      You are responsible for continuing to make at least your monthly minimum payments until the insurer decides if it will approve your claim.
  • You may continue to be charged monthly premiums while receiving benefits.
    • For example, if you are receiving job loss benefits, you may continue to be charged the monthly premium for other benefits to which you may still be entitled, such as life and critical illness insurance.
  • Interest will continue to be charged on your balance.

Critical illness or death claims

  • The insurance company will pay off your credit card debt up to a maximum amount (usually between $5,000 and $25,000).
  • Coverage is usually limited to certain critical illnesses such as cancer, heart attack and stroke.
  • Many credit card balance insurance policies do not require detailed information about your medical history to qualify.

However, if you have a pre-existing condition, you must have been free of the illness for a period of time—usually 6 to 12 months—as defined in the terms and conditions, before you are eligible for benefits.

The injuries or illnesses covered by the insurance will be included in your credit card balance insurance contract or certificate. You will not be covered for illnesses or injuries that are not included in the list.

Before you sign anything, read the terms and conditions carefully and make sure you fully understand what is covered by the policy.


The cost of credit card balance insurance

Like other forms of insurance, you must pay a monthly fee, called a “premium.” This premium varies from one credit card issuer to another.

The premium is charged directly to your credit card every month and is subject to applicable provincial or territorial taxes. If you don’t pay your credit card balance in full before the statement date, you will also be charged interest on the premium.

The premium will change each month depending on the balance you owe: the lower the balance, the lower the premium. If you carry a large balance from month to month on your credit card, the credit card balance insurance premiums can add up quickly.

The example provided below shows the premium for different balances owing, assuming the monthly outstanding balance remains the same for the full year.

Example: Credit card balance insurance costs
This example is based on a premium of $0.95 per $100 of balance owing. However, credit card balance insurance premiums vary by credit card issuer. Details in this example are for illustration purposes only.
Balance owing
(on the statement date)
($)
Monthly premium
(balance owing
÷$100 × 0.95)
($)
Approximate
yearly cost
(monthly premium
×12 months)
($)
100   0.95      11.40
500   4.75      57.00
1,000   9.50    114.00
2,500 23.75    285.00
5,000 47.50    570.00
10,000 95.00 1,140.00
If you are close to the limit on your credit card, the monthly charge for your credit card balance insurance may put you over your credit limit. If this happens, your credit card issuer may charge you an “over-the-limit” fee. Check with your credit card issuer to find out whether it charges this fee.




How to get credit card balance insurance

You can get credit card balance insurance through your credit card issuer when you sign up for a new credit card. You can also ask your credit card issuer to start the insurance coverage on your existing card at any time.

If your credit card is issued by a federally regulated financial institution, such as a bank or trust company, the financial institution must provide you with the following information:

  • the cost and charges associated with credit card balance insurance
  • how to cancel credit card balance insurance.

Your credit card balance insurance contract or certificate will list the terms and conditions of your insurance coverage, including the benefits and exclusions.

When coverage starts, there is usually a 30-day “risk-free” trial period, during which time you can cancel the policy and obtain a refund of any premiums you have paid. After 30 days, monthly billing charges start—unless you cancel your policy before the end of the trial period.

There is usually a maximum age—often between 65 and 70—to qualify for credit card balance insurance.

 


How to cancel credit card balance insurance

You may cancel your credit card balance insurance at any time, usually by contacting the insurance company, which is often a different company from the credit card issuer.

If your credit card was issued by a federally regulated financial institution, such as a bank or a trust company, the financial institution can only charge you for the amount of time you were actually signed up for the insurance. To learn more, see your rights when cancelling an optional financial product or service, such as credit card balance insurance.

Check your policy for the specific procedures you will need to follow to cancel your policy.



How to make a claim

If you die, become critically ill, lose your job or have an accident, you (or someone acting on your behalf) must notify the insurance company—which may be a different company from the credit card issuer—right away.

The insurance company will then ask you or your representative to complete a claim form, usually within a certain period of time following the death, involuntary job loss or health diagnosis. The timeframe varies by insurer and will be outlined in your policy.

Before filing a claim, you or your representative should read the insurance contract or certificate carefully to ensure that all the necessary information to support the claim is available. In most cases, proof of your death, injury, disability or involuntary unemployment must be provided in the form of a death certificate, or a letter from your doctor or former employer.

Although a medical examination is not necessary when you apply for credit card balance insurance, an insurance company may request that you undergo a medical exam by a doctor of its choice before it pays out disability or critical illness benefits.

Check your policy for the specific procedures you will need to follow to file a claim.


Before signing up for credit card balance insurance

Make sure you understand the cost, the age required to qualify for benefits and the maximum amount that the insurance company will pay.

Request a copy of the sample insurance contract or certificate so that you can review the terms and conditions before signing up.

Review the insurance certificate or contract carefully once you receive it and check for the following key points:

  • how much the insurer would pay in each situation that is covered (for example, job loss, critical illness)
  • details of the benefits, including any conditions or limitations that apply
  • when and how benefits are paid
  • how the premium is calculated
  • whether or not the policy covers your spouse or the supplementary cardholder the maximum period of time for which benefits are paid
  • how to submit a claim and the expected turnaround times
  • how long is the waiting period before you are eligible to receive benefits
  • how long is the trial period
  • how to cancel at no cost during the trial period.

If you have a complaint

If you have a complaint, bring it up with your credit card issuer or insurance company as soon as possible.

The Financial Consumer Agency of Canada (FCAC) has a complaint-handling process search tool on its website that can help you find out about the complaint-handling process for your insurer. It is important that you follow your credit card issuer or insurance company’s internal complaint-handling process before taking further steps.

If your problem has still not been resolved, contact your provincial insurance regulator. Provincial insurance regulators enforce consumer protection laws and also oversee the licensing and conduct of insurance agents and brokers in their province.

A list of federal, provincial and territorial insurance regulators is available on FCAC’s website.

If your complaint has not been resolved by the insurance company or regulator, you can contact one of the following organizations that can offer a third-party review of your complaint:

  • OmbudService for Life and Health Insurance (OLHI)
    www.olhi.ca
    1-888-295-8112 (English)
    1-866-582-2088 (French)
  • Québec: L’Autorité des marchés financiers (AMF)
    www.lautorite.qc.ca
    Québec: 418-525-0337
    Montréal: 514-395-0337
    Other regions: 1-877-525-0337

What is insurance?

Insurance is a way of reducing your potential financial loss or hardship. It can help cover the cost of unexpected events such as theft, illness or property damage. Insurance can also provide your loved ones with a financial payment upon your death.

How does insurance work?

You pay a fee called a premium and, in exchange, the insurance company agrees to pay you a certain amount of money if the event you are insuring against is covered and happens during the term of the policy.

The details of insurance protection, such as exactly which events are covered and for how much, are defined in your insurance policy. The insurance policy is a contract between you and the insurance company.

Why would I need insurance?

Insurance can protect you and your loved ones from financial loss if something unexpected happens.

For example:

  • Auto insurance could pay the cost of repairs to your vehicle if you have an accident.
  • Life insurance could provide your family with money to support themselves when you die.
  • Home or tenant insurance could pay for the cost to repair your home if there is a fire in your house, condominium or apartment.

The decision to get insurance will depend on your circumstances and your stage in life. For example, you may want to consider getting life insurance if you have a partner or if you decide to start a family. However, if you are a single person with no dependents, you may not need life insurance. Similarly, your provincial or territorial health plan may be enough to cover your basic medical needs, but if you travel outside of Canada frequently, you may want to get travel health insurance.

There are many insurance products available to cover different types of risks. Auto insurance is mandatory if you own a vehicle. Most other types of insurance are optional. However, if you think that you cannot afford the potential financial loss or damage, then you should consider buying insurance.

This publication will provide you with a brief description of some of the most common types of insurance, what is involved in getting insurance, and what to do if you need to make a complaint.


Understanding the language of insurance

Here is a list of some basic insurance terms that you may encounter as you look into insurance.

Term
Definition

Agent

Someone who represents one insurance company and sells its insurance products. In some cases, a life insurance agent may represent several different insurance companies.

Agents must usually be licensed in the province or territory in which they do business.

Broker

Person or company who sells the insurance products of several different insurance companies.

Brokers must usually be registered in the province or territory in which they do business.

Claim

Official notice you provide to your insurer requesting payment for a loss or event covered by your insurance policy.

Claim investigation

Process used by insurers to get the claim information necessary in order to decide whether to pay a claim.

Coverage

Amount of protection you have purchased.

The maximum amount of money the insurance company will pay you if you make a claim for a loss or event covered by your policy.

Deductible

Amount of your claim that you agree to pay before the insurer pays the rest.

Choosing a higher deductible will decrease the cost of your insurance premiums because you agree to pay for a larger part of your loss.

This term may be used with health, dental, home and auto insurance policies.

Exclusions

Things that are not covered by your policy. Read your policy carefully and make sure you understand what is and is not covered.

For example:

  • Some health insurance policies may exclude certain medical conditions you had before you applied for the insurance.
  • A travel policy may exclude claims made if you travel to a high-risk country.
  • A home insurance policy may exclude claims for some types of water damage.

You may be able to buy extra insurance, known as a rider or endorsement, to pay for risks not covered in your basic policy.

Insured

Person(s) protected by the insurance policy.

Insurer

Insurance company that issues the insurance policy.

Policy

Legal contract between you and the insurer.

The policy specifies:

  • what risks are covered by the insurer
  • under what circumstances the insurer will make a payment to you
  • how much money or what type of benefit you will receive if you make a claim. The amount of money or level of benefit you would receive depends on the amount of your damage or loss.

Policyholder

Person who owns the insurance policy; usually, but not always, the insured.

Premium

Amount you pay to buy insurance.

The premium is usually paid monthly, quarterly or annually. The amount of your premium may change over time.

Rider

Clause or term added to your insurance policy to provide protection, for an additional cost, for risks not covered in a basic policy. Also known as an endorsement.

Check with your insurer to find out what is and is not covered by your policy and for what risks you might need extra coverage.

Risk

Probability that an insured event, such as loss, injury or death, will happen while your policy is in effect.






Life and health insurance


Here is a list of some insurance terms that you may encounter as you look into life and health insurance.

Term
Definition

Beneficiary or beneficiaries

The person(s) named on the life insurance policy who will receive the death benefit when you die. For example, you may want to name your spouse or child as the beneficiary of your life insurance policy.

Beneficiaries may be revocable or irrevocable.

If the beneficiary is revocable, the policy owner can change the beneficiary at any time without advising the beneficiary.

If the beneficiary is irrevocable, the policy owner must have the irrevocable beneficiary’s written permission before making beneficiary changes.

Benefit

Amount that the insurer will pay you if the insurer accepts your claim.

Cash value

Cash amount that the life insurer pays to the policyholder when a life insurance policy is cancelled.

It may also be possible to take out a loan against the cash value of the policy.

The cash value is not usually added to the face value of your policy, which is paid out upon your death.

This term is normally used with a permanent life insurance policy.

Contestability period

Period of time during which the insurance company can contest a life or health insurance claim based on incomplete or incorrect information the insured provided when applying for insurance.

In cases of fraud, there is no time limitation.

Death benefit

Amount of money that the insurer will pay your beneficiary or beneficiaries upon your death.

This term is normally used with a life insurance policy.

Material facts

Things you know that could affect an insurance company’s decision about whether to insure you and what price (premium) you will pay.
 
For example, if you are applying for life insurance, you must tell the insurer if you smoke.

If you do not tell the insurer about material facts, the insurer could cancel your policy and refuse to pay any claims.

Pre-existing condition

Medical condition you know you already have before you apply for insurance—for example, asthma, high blood pressure or heart disease.

Rescission right

A policyholder’s right to cancel a life insurance policy within 10 days of paying for it and to be refunded any premiums paid.

Underwriting

The process that the insurer uses to evaluate the risk associated with potential clients and to assess their eligibility to receive coverage.

The underwriting process will determine:

  • how much coverage to provide the client
  • which conditions are excluded, if any
  • premium to be paid by the client.


Naming a beneficiary

Naming a beneficiary is important to ensure that the life insurance benefit paid upon your death goes to whomever you want to receive it.

You can name more than one beneficiary. If you name more than one beneficiary for your life insurance policy, the insurance company will divide the death benefit among them.

Beneficiaries may be revocable or irrevocable:

  • If the beneficiary is revocable, you can change the beneficiary at any time without advising the beneficiary.
  • If the beneficiary is irrevocable, you must have the irrevocable beneficiary's written permission before making beneficiary changes.

    If you live in Quebec and name your spouse as your beneficiary, the designation is automatically irrevocable, unless you specifically make it revocable when you first designate your spouse.

The person(s) you name on the life insurance policy will receive the proceeds of the death benefit when you die. For example, you may want to name your spouse or child as the beneficiary of your life insurance policy:

  • If you name your spouse, another family member, friend or charitable organization as beneficiary, the death benefit will be paid directly to them and will not be subject to taxes when your estate is settled.
  • If you name your estate as beneficiary, the death benefit will become part of your estate and be distributed according to the terms of your will.

    In this case, the death benefit will be subject to estate taxes and will not be accessible to your beneficiary until your will has been dealt with by the courts.

    If the death benefit is part of your estate, it can be seized by creditors to pay for your outstanding debts.
  • If your named beneficiary is under legal age at the time of your death, you may want to set up a trust and designate a trustee or administrator who can receive and hold in trust the proceeds of the death benefit on behalf of the minor.

    Otherwise, the death benefit, plus accrued interest, will be held in trust by the province or territory and paid out when the beneficiary reaches legal age.

    Consult a lawyer or financial advisor for more information.
  • If you do not name a beneficiary, your estate will be the default beneficiary.

    The proceeds of the death benefit will become part of your estate, subject to estate taxes, and also be vulnerable to claims from creditors.

When you purchase life insurance, you will need to complete a beneficiary designation form. Be sure to complete and sign the designation of beneficiary form and return it to the insurer. Otherwise, the insurer will consider that you have not properly designated any beneficiary. You will need to name a beneficiary for each policy that you have.

Also, consider naming a contingent beneficiary. This is the person(s) who will receive the proceeds of the death benefit should your named beneficiary die before you or die at the same time as you.

Review your beneficiary designations from time to time and update them if necessary.


Health insurance

There is a variety of health insurance products available that could help you:

  • pay for services that your regular health care plan does not cover
  • supplement your income if you suffer a major illness or severe injury
  • pay for your medical expenses if you become ill while on vacation.

Check your policy to find out if there is a deductible or if the amount payable is limited to a maximum percentage of the overall claim, or a maximum annual amount.

Supplementary health insurance pays for health services, such as prescription drug and dental services, not generally covered by provincial or territorial government health plans.

Before buying supplementary health insurance, check your employer’s benefits plan to make sure that you do not buy coverage you already have. For example, you may already have dental coverage through your employer’s plan.

Disability insurance replaces a portion of your regular income for a specified time if you cannot work temporarily or are permanently disabled due to an injury or illness, such as loss of a limb, a heart attack or an operation.

Some plans pay tax-free benefits while others are taxable. Generally, if you pay the entire amount of the disability premium yourself, any disability benefits you receive will be tax-free.

However, if your employer pays all or part of the disability premium, your disability benefits will be considered taxable and subject to income taxes.

Keep in mind that permanent disability insurance does not necessarily mean that you will receive benefits for the rest of your life. The term “permanent” refers to the nature of the disability, not to the payments from the insurance company.

Each insurance provider has different definitions of what permanent disability means and the criteria that must be met before you can file a claim.

Travel medical insurance pays for medical treatment while you travel outside of Canada.

The policy may not provide coverage for medical conditions you had before applying for coverage, so read the policy carefully.

Critical illness or trauma insurance pays a one-time lump-sum payment if you are diagnosed with a critical illness that is specified in your policy, such as cancer or Alzheimer’s disease.

There are often exclusions, so read the policy carefully. Be sure you know what is and is not covered.

Long-term care insurance can provide coverage if you enter a long-term care facility such as a nursing home. It may also provide coverage for the services of a caregiver while in your own home. Some conditions and restrictions may apply.



Evidence of insurability

As part of the underwriting process, life and health insurance companies may require that you complete a medical questionnaire or exam, also called “evidence of insurability,” before approving you for a policy.

Basic medical questionnaire

Some types of insurance, such as group policies, may require only that you sign a general statement about your health or respond to a short medical questionnaire before approving you for coverage.

  • Coverage will usually begin immediately.
  • Illness is assessed at the time of the claim.
  • The insurer may review your medical information and confirm whether you qualify for coverage only when you make a claim.
  • The insurer may cover pre-existing conditions if you have been free of the illness for a period of time as defined in the certificate of insurance or the terms and conditions.

Detailed medical questionnaire

In addition to completing a detailed medical questionnaire about your past health history and lifestyle, some types of insurance, such as individual policies, may also require that you provide medical records and undergo medical testing, such as saliva or blood tests.

  • Coverage will not begin until the insurer has reviewed your medical information and confirmed that you qualify for coverage.
  • Illness is assessed at the time of the application and the medical information provided will determine whether you qualify for coverage.
  • The insurer will review your medical information and decide whether to cover or permanently exclude any pre-existing conditions.
  • Some insurers may agree to cover pre-existing conditions at a higher premium.

For most types of life insurance, the insurance company cannot increase your premiums based on a change of health after your policy is issued.

Be sure to read your policy carefully and be aware of any exclusions relating to pre-existing conditions.


Contestability period

The contestability period is the time, usually two years, during which the insurance company could contest a claim if it believes you committed fraud on the insurance application.

If the insurance company finds that you did not disclose all of the relevant information about your medical history, such as symptoms you may have experienced, the insurer could void the contract and refuse to pay the claim, even though you have already paid premiums.

If your insurance company denies your claim, it might cancel the policy and return the premiums paid to your beneficiaries. Premiums would not be returned in cases of fraud. The contestability period applies even if leaving out the information was an oversight and not done intentionally.

However, the insurance company cannot deny a claim after the contestability period has passed, except in cases of fraud.

No matter what type of insurance you are applying for, be sure to answer all questions on the application fully and honestly. If you don’t, your policy could be cancelled and any claim you make in the future could be refused.


Property and casualty (general) insurance



Property insurance can provide coverage for loss or damage to:

  • your home or personal possessions
  • your car
  • your business.

Casualty insurance can provide coverage against legal liability for losses caused by:

  • injury to other people
  • damage to the property of others.

Property and casualty insurance is also known as general insurance. Here is a list of some key terms that you may encounter as you look into property and casualty insurance.


Term
Definition

Actual cash value

The cost of the insured item when it was new, minus depreciation (loss of value due to the age and condition of the item). This is one method of determining the amount of money the insurer will reimburse you if you make a claim.

How the depreciation is calculated depends on the item insured and the insurance company.

Premiums for policies with actual cash value are generally less expensive than those for policies with replacement value.

Replacement value

The actual cost to replace an item destroyed or damaged in the event of a covered loss. This is another method of determining the amount of money the insurer will reimburse you if you make a claim.

Premiums for policies with replacement value are generally more expensive than those for policies with actual cash value.




Home insurance (house, condominium and tenant) 

For most people, a home, whether it is a house or a condominium, is the largest single purchase or investment they will make. Home insurance can help protect your home or contents in case of theft, loss or damage.

Insurance is also important for protecting tenants. You should have enough insurance to cover the cost of replacing everything in your home if it were all destroyed or stolen and to cover your liability to others.

The amount of money you receive from your insurer for a covered loss will depend on whether your coverage is for actual cash value or replacement value. Actual cash value policies are usually less expensive than replacement value policies, but generally pay less when you make a claim.

For example, imagine that your television was damaged in a fire and is covered under the contents portion of your home insurance policy. The television is five years old; when it was purchased, it cost $2,000.

A replacement value policy would generally cover the cost of buying a new television that is of similar quality to the one you lost.

However, if you have an actual cash value policy, the insurer would only reimburse you for the value of the used television at the time of the claim, which may be much less than the purchase price.

When shopping around for home, condominium or tenant insurance, find out if the quotes you receive are based on actual cash value or replacement value.

Home insurance pays for damage to or loss of the interior and exterior of your house or property. 

Home insurance can cover: 

  • damage, theft or loss of your personal possessions
  • personal property stolen from your vehicle
  • damage or injury to others who visit your home or property

For example, if someone slips and falls in your driveway, that person may be able to make a claim against you for the expenses incurred as a result of damage or loss caused by the injury. 

  • accidental damage you cause to others property.

For example, if a fire starts in your house, your home insurance can pay for the damage the fire causes to your neighbour’s house.

Home or property insurance is usually required as a condition of getting a mortgage. Most financial institutions will not give you a mortgage without proof of insurance.

Condominium insurance

Condominium coverage is different from home insurance because it covers only the inside structure of your unit and your personal liability.

Condominium insurance can pay for:

  • damage to or loss of the interior structure of your unit
  • damage to or loss of your belongings
  • improvements you or the previous owners made to your unit
  • your personal liabilities in case someone is injured in your home
  • accidental damage you cause to other units or the condominium common areas.

If you own a condominium, the condominium corporation will have a master insurance policy that covers the outside structure of the condominium and the condominium’s common areas. However, this policy does not include coverage of your unit or other units.


Tenant (renter’s) insurance

If you live in an apartment or rent your home from someone else, you should still look carefully at how tenant insurance could protect you.

Tenant insurance can pay for:

  • damage to or loss of your possessions if you rent or lease your apartment or home from someone else
  • personal property stolen from your vehicle
  • accidental damage you cause to any part of the apartment building or home you are renting
  • injury caused to visitors.

For example, if the bathtub overflows and floods your apartment, tenant insurance can pay for the damage caused to your apartment, the apartment building and other tenants or their property.


Auto insurance

Auto insurance is mandatory if you own a licensed vehicle. All Canadian provinces and territories require drivers to have at least liability and accident benefits/bodily injury coverage. Some provinces may require additional coverage.

Liability insurance covers losses (such as injury or death) that your vehicle causes to other people or damage to their property. It does not cover the cost of repairs to your own vehicle.

Accident benefits/bodily injury insurance covers the cost of your own medical expenses and loss of income when you are in an accident.

You can also purchase optional insurance such as collision and comprehensive coverage.

Collision insurance covers the cost of repairing or replacing your vehicle if you hit another vehicle or object.

Comprehensive insurance covers the cost of repairing or replacing your vehicle due to other types of damage or loss, such as vandalism or theft. Comprehensive insurancedoes not cover loss or damage to your vehicle if you hit another vehicle or object in a collision.

Most auto insurance policies do not cover the loss of personal possessions, such as golf clubs, clothing or personal electronics, stolen from your vehicle. Personal possessions stolen from your vehicle are usually covered by your home or tenant insurance. Check your home insurance policy to find out if it provides coverage for theft of personal items from your vehicle.


Business insurance

If you have a home-based business or work from your home, you should consider getting business insurance. Business insurance can protect you against loss or damage to physical property or the loss of your business’ ability to operate and generate income.

Commercial property insurance pays for damage to or loss of your business premises. It also protects against damage, theft, or loss of the business property or inventory.

Public liability insurance protects your business against third-party liability claims. For example, a delivery person who slips and falls at your place of business may be able to make a claim against you for the expenses and the effect of an injury, or you could be held responsible if your product causes damage to others.

Errors and omissions insurance protects service providers against claims made against them because of a mistake they may have made.

Home or tenant insurance will generally not pay for claims related to your home-based business or business activities that take place in your home. For example, inventory stolen from your home will not be covered by your home or tenant insurance policy.

If you have a home-based business or conduct business in your home, it is important that you declare it to your insurer and arrange for business or commercial coverage.


Insurance for your debts

If you have a mortgage, line of credit or other loan with a financial institution, you may also be offered insurance to make payments on that debt in the event that you are unable to, due to illness, accident or death.

These types of insurance are also known as creditor insurance because benefits are paid to the company that you owe money to. In most cases, the insurance product is linked to one specific debt, such as a mortgage, line of credit or a loan.

The most common categories offered are:

Life insurance on the debt

The insurance company pays the outstanding balance on the debt to which the insurance applies in the event of your death.

For mortgages and other loans for fixed-amounts, the death benefit (the outstanding loan or mortgage balance) decreases as you make payments and the outstanding balance is reduced.

Premiums are based on the original amount of the debt. As you pay down your debt, the premiums generally remain the same even though you will owe less on your loan or mortgage over time.

The financial institution that is owed the debt is the beneficiary of any creditor life insurance policy. The death benefit is paid to the financial institution, and not to your family or heir(s).

You would need to buy a separate life insurance policy if you want your family or heir(s) to receive a death benefit in the event of your death.

Critical illness insurance on the debt

In most cases, the insurance pays the outstanding balance if you are diagnosed with one of the critical illnesses specified in the policy or Certificate of Insurance.

Each policy or Certificate of Insurance lists which illnesses are covered and the requirements to qualify. For example, cancer is usually one of the illnesses covered, but some policies may limit coverage to certain types of cancer.

Pre-existing conditions are usually not covered, but some policies will pay benefits if you have been free of the illness for a period of time, defined in the terms and conditions. Premiums are based on the amount of the debt.

Disability insurance on the debt

Disability insurance generally makes the minimum required payments on the debt, for a specified time, while you are disabled. It generally does not pay off the full outstanding balance.

You will still be responsible for paying the balance when you recover or after the coverage period ends.

Each policy will define the disabilities that would make you eligible for benefits and other terms and conditions, including the amount of the payments and how long they would last.

Credit card balance insurance

Credit card balance insurance is usually a combination of several insurance products, including critical illness, disability, job loss and life insurance.

If you become injured, disabled or lose your job, the insurance will make the minimum payments on your credit card, or will pay a specified percentage (usually 3–5%) of the outstanding monthly balance.

If you die or have a critical illness, the insurance company will pay off the credit card balance owing at the time of your illness or death. There is usually a maximum period of time for which benefits will be paid.

The premium is charged directly to your credit card every month and is subject to applicable provincial or territorial taxes. You will also be charged your credit card’s interest rate if you do not pay the balance in full.

The premium will change each month depending on the balance you owe: the lower the balance, the lower the premium.

Credit balance insurance is optional and is not a condition for obtaining a credit card.

Things to consider before you sign up for insurance on your debts:

  • Review your existing insurance coverage—for example, you may already have insurance coverage through your employer that will help pay off your debts in case of death or a disability.
  • Compare the coverage offered with other options, such as a term life policy, to see which option meets your needs and offers the best value.
  • Be aware that creditor insurance often has exclusions relating to pre-existing conditions, such as asthma, high blood pressure or heart disease. Read your policy carefully and make sure you understand what is covered.



Buying insurance


Make sure you get the right insurance to meet your needs, which may change over time. Evaluate your situation from time to time, as you may need to update your policy after major life events such as:

  • starting a family
  • buying a home
  • starting a business
  • buying a new vehicle.

Your decisions about the type and amount of insurance you get will depend on your situation, your budget, your personal beliefs and the value of what you are insuring.

Know what insurance coverage you already have so that you do not buy unnecessary coverage. For example, your employer’s benefits plan may offer supplementary health coverage, or travel health insurance may be included if you pay for your trip with a credit card.

 

Tip

You may be able to get better prices if you are a member of a union, association or club. Many insurers offer special lower rates for group coverage. However, coverage usually ends when you are no longer a member of the group or reach a certain age. 

When buying insurance:

  • Evaluate your situation to determine what risks you may need to insure against. You may also wish to have an emergency savings fund to protect you against some of the smaller financial risks.
  • Check with your employer to see whether you already have certain types of insurance under your employer’s plan.
  • Shop around and compare both the coverage and the prices. Some policies may be cheaper but may not offer the same level of service or coverage.
  • Be sure to get enough insurance. If you make a claim, your insurer will only pay up to the maximum amount insured by your policy. When deciding how much insurance you might need, consider the value of the item you are insuring and the full financial impact of paying for the loss or event you are insuring against.
  • For those types of insurance that have a deductible, such as home and auto insurance, determine how much of a deductible you can pay if you need to make a claim. Generally, a higher deductible will reduce your premiums, but you will need to pay the full amount of the deductible if you make a claim.
  • Before signing, read the policy carefully. Make sure you understand what is and is not covered by your policy.

Where can you buy insurance?

You can buy insurance from:

  • a licensed insurance agent
  • a registered insurance broker
  • an insurance company.

Most types of insurance can also be purchased over the phone or Internet or by mail; however, life insurance is usually purchased from a licensed agent.

Other types of insurance, such as mortgage default insurance or credit insurance, are usually offered by the lender when you apply for financing.

 

Tip

You may be able to get a discount if you buy more than one type of insurance policy from the same insurance company—for example, you may get a discount if you buy your home and auto insurance from the same insurance company.


Choosing an insurance agent or broker

Before choosing an agent or broker:

  • Shop around.
  • Ask friends and family if they can recommend someone they have dealt with. Ask the agent or broker to provide references from other clients.
  • Ask about the insurance agent’s or broker’s qualifications. Find out what training the agent or broker has received.

For example, if you are dealing with a life insurance agent, ask whether he or she has passed the Life Licence Qualification Program (LLQP).

  • Find out if the agent or broker belongs to a professional association.

For example, does the agent or broker belong to Advocis, the Financial Advisors Association of Canada or the Insurance Brokers Association of Canada?

  • Contact the insurance regulator in your province or territory to confirm that your agent or broker is licensed or registered to do business in your province or territory.

Dealing with a licensed agent or registered broker will help to ensure that he or she is properly trained and has the resources to provide you the insurance services you may need.

A list of provincial and territorial insurance regulators is available on FCAC’s website.

  • Find out how long the agent or broker has been in business and what services the agent or broker provides after selling you the policy.

Tip

Never pay a fee to insurance agents or brokers. This is not a normal practice in the insurance industry and could be a scam. Licensed insurance agents and registered brokers receive payment from the insurance company and generally do not charge you a fee.

However, agents and brokers will often accept premium payments on behalf of an insurer. If you pay premiums to an agent or broker, the cheque or payment should be made out to the insurer and not to the agent or broker.


Choosing an insurance company

Regardless of how you buy insurance, your policy will be issued by an insurance company.

Before accepting an insurance company recommended to you by your agent or broker, or choosing an insurance company yourself, contact the insurance regulator in your province or territory to confirm that the insurance company is licensed to do business where you live. Dealing with a licensed insurance company will ensure that you have access to an independent dispute resolution system if you need to file a complaint.

Make sure the company is a member of Assuris or the Property and Casualty Insurance Compensation Corporation (PACICC).

If your life insurance company fails, Assuris protects your benefits up to certain amounts. A life insurance company authorized to sell insurance policies in Canada is required by the federal, provincial and territorial regulators to become a member of Assuris.

If your property and casualty insurance company fails, PACICC protects your benefits up to certain amounts. A property and casualty insurance company authorized to sell insurance policies in Canada is required by the federal, provincial and territorial regulators to become a member of PACICC.


Qualifying for insurance

Insurance companies will evaluate whether they will issue a policy based on certain criteria, such as:

  • your age
  • your gender
  • your medical history
  • any previous claims you have made
  • the amount of coverage you are requesting.

No matter what type of insurance you are applying for, be sure to answer all questions on the application fully and honestly. If you don’t, your policy could be cancelled and any claim you make in the future could be refused.


How are premiums calculated?

Your premium is based on the probability that you will make a claim. Factors such as the ones listed previously may affect the cost of your premiums.

Insurers usually charge higher premiums to people who they think are more likely make a claim. People whom insurers consider less likely to make a claim will usually pay lower premiums.

For example, if you have a history of medical issues, you may pay higher life insurance premiums than someone with few medical issues.

If you have several accidents on your driving record, you may pay higher auto insurance premiums than someone who has no accidents on his or her driving record.

Maintaining your coverage

There are certain things you need to do to maintain your insurance coverage.

Pay your premiums on time. If you do not pay your premiums on time, your policy may be cancelled for non-payment. Your coverage will stop and you will no longer be protected. If your policy is cancelled due to non-payment, you may find it difficult to get coverage in the future, or you may have to pay higher premiums.

For some types of insurance, you must tell your insurer as soon as possible about any change in your circumstances that may affect the insurer’s ability to cover your losses. For example, your automobile insurer will need to know if you have convictions for driving offences.

To renew your policy, you may need to tell the insurer about any changes to that information within a certain time period before your current policy ends. Your policy will list the specific procedures you will need to follow to renew your policy.


Cancelling your coverage

If you buy life insurance and have second thoughts, most insurers will allow you a 10-day review period from the time you received the policy, during which you can cancel the policy. If you choose to do so, you will usually be refunded any premiums you have paid. This option does not apply to home and auto insurance. Check the details in your life insurance policy to find out if a review period is available.

You can also cancel a life, health or property and casualty insurance policy at any time while it is in force by contacting the insurance company in writing. However, if you cancel your policy before the expiry date, a penalty will be applied.

 

Tip

Make certain that your new policy is in force before cancelling your previous policy or letting it expire. Otherwise, you may not be covered while waiting for the new policy to come into force.


Making a claim

When you make a claim, you are officially asking the insurer to pay you for a loss or event covered under the terms of your insurance policy.

Before submitting a claim, check your policy’s terms and conditions, as well as any exclusions, to see if your loss is covered.  Insurance companies will pay only for the specific losses described in your policy. Your insurer will review your policy and advise you whether your claim is eligible under the terms of your contract.

Contact your insurance agent, broker or insurance company promptly about your claim. Most insurers have time limits within which you must submit your claim. The limit usually varies from 90 days to 12 months from the date of the loss or event.

The insurer may investigate the circumstances surrounding your claim to confirm that no fraud was involved. For example, the insurance company may request medical records or police accident reports. This information will be used to determine whether the insurer will pay your claim.

When submitting your claim to your insurer, make sure to provide all supporting documents. For example, in the case of an auto insurance claim, you may need to provide an accident report; for a life insurance claim, you may need to provide a death certificate.

Your policy lists the specific claims procedures you will need to follow. 

 

Tip

If the amount of your claim is only a little more than your deductible, consider whether you can afford to pay for the claim yourself.

Making a claim may increase your premiums. Some insurance companies offer a discount if you have not made any claims under your policy. This is often the case for home and auto insurance.


Protecting yourself against insurance scams

Insurance scams can take many forms. Here are a few tips on how to avoid them:

  • Beware of any email message that claims to be from your insurance company and that asks you to confirm or give certain personal information. This could be a scam to obtain information about your personal finances and could lead to identity theft.
  • Do not pay your premiums through a money transfer or money wiring service. This is not a normal practice and could be a scam to get you to buy fake insurance.

If you have a complaint

There are several options available to you if you have a complaint about your insurance agent, broker or insurance company. All federally regulated insurers must have a complaint-handling system in place. They must provide policy holders with information on:

  • how to make a complaint 
  • how long the process will take
  • the next steps if the complaint remains unresolved.

For a list of federally regulated financial institutions, visit the website of the Office of the Superintendent of Financial Institutions (OSFI), and click on “Who We Regulate.”



Resources

Federal, provincial and territorial regulators

Canada’s insurance industry is regulated federally as well as by the provinces and territories.

Most insurance companies are federally incorporated. The federal government ensures that all federally incorporated insurance companies are financially sound. Federally incorporated insurance companies must also be members of a third-party dispute-resolution system to handle consumer complaints.

However, each province has its own insurance regulator and all insurers must follow the rules and regulations of the province or territory in which they carry on business. Provincial insurance regulators enforce consumer protection laws and also oversee the licensing and conduct of insurance agents and brokers in their province.

If you want to confirm that the insurance company, agent or broker you are dealing with is licensed or registered to do business in your province or territory, or if you want more information on how to protect yourself, contact your provincial or territorial regulator.

A list of federal, provincial and territorial insurance regulators is available on FCAC’s website.

Life and health insurance

Information:

  • Canadian Life and Health Insurance Association (CLHIA)
    www.clhia.ca

Information and complaints:

  • OmbudService for Life and Health Insurance (OLHI)
    www.olhi.ca
    1-888-295-8112 (English)
    1-866-582-2088 (French)

Property and casualty (general) insurance

Information:

  • Insurance Bureau of Canada (IBC)
    www.ibc.ca

    Consumer Information Centres:
    • British Columbia, Saskatchewan and Manitoba: 1-877-772-3777 ext. 222
    • Alberta and The North: 1-800-377-6378
    • Ontario: 1-800-387-2880
    • Quebec: 1-877-288-4321
    • Atlantic: 1-800-565-7189 ext. 227
  • Quebec: Groupement des assureurs automobiles
    www.gaa.qc.ca
    • 1-514-288-4321 (Montreal area)
    • 1-877-288-4321 (elsewhere in Quebec)

Information and complaints:


Protecting your credit report: How to correct errors and check for fraud


Your credit report is important for your financial health. It can help you get approved for credit cards and other loans. It can also affect your ability to rent housing or get hired for a job.

Protect your credit report by checking carefully for errors and signs of identity theft.

What is your credit report?

It is a record of your past and present use of credit cards and loans. Mobile phone and Internet accounts may be included, even though they are not credit accounts.

It includes details about your bill payments and your personal information.

The two major credit reporting agencies that keep your information on file are Equifax Canada and TransUnion Canada.

What can you do if you find errors?

You have the right to dispute any information in your credit report that you believe is wrong.

You can ask the credit reporting agencies to correct errors. It’s free.

Why it is important to check for errors

Errors can give lenders the wrong impression. You could be turned down for a credit application or be charged a higher interest rate.

Errors can also be a sign that someone is trying to steal your identity and open credit cards, mortgages or other loans under your name.

What errors should I watch out for?

Order your credit report from both Equifax Canada and TransUnion Canada. They may have different information about you.

Check for:

  • mistakes in personal information, such as wrong mailing addresses or incorrect date of birth
  • errors in credit card and loan accounts, such as a payment you made on time that is shown as late
  • negative information about your accounts that is still listed after the maximum number of years it’s allowed to stay on your report
  • signs of identity theft, such as credit cards or loans listed that you never opened yourself.

What cannot be changed?  

You cannot change factual, accurate information related to a credit account. For example, if you missed payments on a loan or a credit card, paying the debt in full or closing the account will not remove the negative history.

Negative information will only be removed after a certain amount of time. The specific time period depends on the type of information and the province or territory where you live. For most information, the maximum is six or seven years.

Watch out for “credit repair” companies that claim they can eliminate negative information, for a fee, before the date it would normally be removed from your credit report. This is not possible.

Steps to correct errors on your credit report   

1. Support your case

Gather receipts, statements and other documents related to your credit accounts. You may need them to prove your claim.

2. Contact the credit reporting agencies

Use their forms for correcting errors and updating information. Do this for both Equifax Canada and TransUnion Canada.

Before the agencies can make any changes, they first need to check your claim with the lender that reported the information.

If the lender agrees there is an error, the agencies will update your file. However, if the lender confirms the information is correct, the agencies will not make any changes.

If your file is updated, some provincial laws require credit reporting agencies to send a revised copy of your credit report to anyone that recently reviewed it.

3. Contact the lender

You may be able to speed up the process by contacting the lender yourself about the error. Ask the lender to verify its files and provide the credit reporting agencies with updated information.

4. Escalate your case

Not satisfied with the results of the investigation? Ask to speak with someone at a higher level at the credit reporting agency or the lender.

If the lender is a federally regulated financial institution, and it will not correct the error, ask for information on its complaint-handling process. The Financial Consumer Agency of Canada (FCAC) also has an online tool you can use to look up your institution’s complaint-handling process.

  5. Add a consumer statement

If you still are not satisfied, ask the credit reporting agencies to add a consumer statement. This lets you provide details about an item on your credit report, using up to 100 words (or 200 words in Saskatchewan). It’s free of charge.

Lenders and others who review your credit report may consider your consumer statement when they make their decisions.

How can I make a complaint?

If you feel you have not been treated properly by a credit reporting agency, you can make a written complaint to the office of your provincial or territorial government that handles consumer affairs.   

How to protect yourself from fraud

Look for accounts that do not belong to you. It could mean you have been targeted by fraudsters who have applied for a credit card, line of credit or other loan under your name.

What should I do if I am a victim of fraud?

  • Write down when you noticed the fraud and the actions you took, including the names of people you spoke to and when you spoke to them.
  • File a report with your local police.
  • Contact lenders, creditors and any other accounts that were affected by the fraud or could be affected (such as a phone company or cable provider).
  • Contact Equifax Canada and TransUnion Canada. Ask them to put a fraud alert on your file.
  • Contact the Canadian Anti-Fraud Centre at 1-888-495-8501 or info@antifraudcentre.ca.

How can I add a fraud alert?

You can ask the credit reporting agencies to put a fraud alert on your credit report if:

  • you have been a victim of fraud
  • your wallet was stolen
  • you had a home break-in.

You may need to provide identification and a sworn statement to prove you have been a victim of fraud.

It tells lenders to contact you and confirm your identity before they approve any applications for credit. The aim is to prevent any further fraud from happening. 

How can I add an identity verification alert?

Under provincial law in Manitoba and Ontario, you have the right to add an identity verification alert, which asks lenders to contact you to confirm your identity before they approve any credit applications.

You do not need to be a victim of fraud to do this. You will need to provide identification. There may be a small fee to add it.

Contact information—TransUnion Canada  

All provinces and territories except Quebec 

Mail
 
TransUnion Canada
Consumer Relations Centre
P.O. Box 338, LCD 1
Hamilton, ON  L8L 7W2
 
Phone (toll-free)
1-800-663-9980
 
Fax
289-288-0030
Online
In person
Newfoundland and Labrador
Consumer Relations
360 Topsail Rd., Suite 301
St. John’s, NL  A1E 2B6
 
Nova Scotia
Consumer Relations
Sunnyside Mall
1595 Bedford Hwy, Suite 220 (Mezzanine Level)
Bedford, NS  B4A 3Y4
 
Ontario
Consumer Relations
3115 Harvester Rd., Suite 201
Burlington, ON  L7N 3N8
 
Prince Edward Island
Consumer Relations
51 University Ave., Suite 103
Charlottetown, P.E.I.  C1A 4K8
 

Quebec

Mail
TransUnion Canada
Consumer Relations
P.O. Box 1433, Station St-Martin
Laval, QC  H7V 3P7
 
Phone (toll-free)
 
1-877-713-3393
 
Fax
 
514-334-8698
 
Online
 
 
In person
 
TransUnion Canada
Consumer Relations
1 Place Laval Ouest, Suite 370
Laval, QC  H7N 1A1
 

Contact information—Equifax Canada 

All provinces and territories

Mail
Equifax Canada
Consumer Relations Department
P.O. Box 190, Station Jean-Talon
Montreal, QC  H1S 2Z2
 
Phone (toll-free)
 
1-800-465-7166
 
Fax
 
514-355-8502
 
Online
 
 
In person
 
Equifax Canada
5700 Yonge St.,
Concourse Level
Toronto, ON  M2M 4K2
 

 Other FCAC information of interest


What is credit card fraud?

Credit card fraud happens when someone steals your credit card, credit card information, or Personal Identification Number (PIN), and uses it without your permission to make purchases in stores, online or by telephone, or to withdraw money from an automated bank machine (ABM).

Tips to prevent credit card fraud

  • Most fraud starts with stolen personal information, such as your name, address, date of birth, and Social Insurance Number (SIN). Don’t leave any personal information lying around at home, in your vehicle or at the office. keep it out of reach, and shred it when it’s old or no longer valid. You should also choose a PIN that is difficult to guess, and never write it down or give it to anyone else.
  • It is also useful to keep, in a safe place, a list of the cards you carry with you, including phone numbers to call in case of theft. The following tips can also help you protect your credit card information:

In public places

  • Carry a limited number of credit cards with you.
  • When entering your PIN, cover the keypad with your hand or body so that no one can see your PIN by “shoulder surfing”—looking over your shoulder.
  • When at a merchant, keep your card in sight at all times to prevent “skimming” or “swiping”—when a thief passes your credit card through a device that reads and records the information from the magnetic stripe.
  • If you notice something suspicious about a transaction or a credit card device at a merchant or ABM, report it to the merchant’s head office and to your credit card issuer.

At home

  • Check your statements each month to ensure that the transactions that appear were made by you.
  • Lock your mailbox if possible. This is a common place for thieves to find a credit card application, a replacement card or even monthly statements.
  • If you receive a replacement credit card, destroy any old card that is no longer valid.
  • If you don’t receive a replacement by the time your card expires, contact your credit card issuer.
  • To cancel a credit card, ask your credit card issuer to cancel the account and send you a written confirmation that it has been closed. Shred the card or cut it into pieces.

On the phone

  • Don’t give out any credit card information over the phone, even if the caller claims to be from a legitimate company. Instead, get the caller’s name, number, and company name and check that they are legitimate before calling back by following these steps:
    • Look up the company’s telephone number yourself. Look at the back of your credit card statements or other legitimate documents to see if the telephone number matches the one you have been given.
    • Call the company, using the phone number you looked up yourself, and verify that the person that has contacted you is indeed a member of the company’s staff.
    • Contact the Better Business Bureau in your province or territory and ask questions about the company.

Online

  • Don’t give out credit card information by e-mail because this is not secure.
  • Make sure the website you are using is secure before transmitting personal information, and keep your computer firewall, anti-virus and anti-spyware systems up to date.

Is there any protection against credit card fraud?

If you are a victim of credit card fraud, you may be protected by one of the consumer protection policies set in place by Visa, MasterCard and American Express. Some conditions may apply. For more information on this protection, contact your credit card issuer and ask about the Public Commitment on Zero Liability, the Visa E-Promise, or the Fraud Protection Guarantee.

The Financial Consumer Agency of Canada (FCAC) makes sure that financial institutions under federal responsibility honor these commitments.

What to do in case of credit card fraud

If you are a victim of credit card fraud, start a written log of what happened and how you first noticed the fraud. Keep all documentation that you think may be helpful in the investigation. Then, follow the steps below, taking notes on who you spoke with and exactly what they said:

  • Report a lost or stolen credit card, or any unauthorized charges that appear on your monthly statement immediately to your credit card issuer.
  • Contact your local police and file a police report.
  • Contact the two credit bureaus in Canada, Equifax and TransUnion. Ask that a “Fraud Alert” be placed in your credit file. At the same time, order copies of your credit report and review them. Make sure all the accounts and debts that show up on your report are yours. Report any incorrect information to the credit bureaus.
  • Contact the Canadian Anti-Fraud Centre (CAFC) toll free at 1-888-495-8501 to report the fraud and get advice. The CAFC plays a crucial role in educating the public about specific mass marketing fraud pitches and in collecting and disseminating victim evidence, statistics and documentation, all of which are made available to law enforcement agencies.

What is debit card fraud?

Debit card fraud happens when someone steals your debit card, debit card information, or personal identification number (PIN), and makes purchases at a point of sale (POS) terminal or online, or withdraws cash from an automated banking machine (ABM) without your permission.

Tips to protect your debit card and PIN

There are many things you can do to keep your debit card information and PIN out of reach of criminals and prevent debit card fraud from happening to you. Protect your debit card information and PIN by following these tips:

Keep your PIN safe

  • Use a hard-to-guess number to make up your PIN. Do not use your name, telephone number, date of birth, address or Social Insurance Number.
  • Change your PIN often.
  • Memorize your PIN and never write it down or give it out to anyone, even family members, as you could be held responsible for transactions made by them.

When using your debit card

  • Never lend your debit card and PIN to anyone.
  • Hide the keypad with your hand or body when you are entering your PIN at an ABM or at a store to conceal it from someone who is “shoulder surfing”—looking over your shoulder to learn your PIN.
  • When using your debit card at a merchant, keep it in sight at all times. A common way to steal debit card information is called “skimming” or “swiping,” where thieves pass your card through a device that reads and records the information from the magnetic stripe.
  • Take your debit card and transaction receipt with you when you have completed your transaction.
  • Always check that your bank account transactions match your receipts.

With your financial institution

  • Ask your financial institution how much money you can withdraw from your account in one day at a bank machine or at a POS machine. This amount is called your daily withdrawal limit. If you think your limit is too high, ask your bank to lower it.

Is there any protection against debit card fraud?

If transactions are made with your debit card without your permission, you may be protected by the Canadian Code of Practice for Consumer Debit Card Services. The Code states that you will not be responsible for losses that result from circumstances beyond your control. This could include, for example, technical problems such as a bank machine giving out one amount of cash but deducting a different amount from the account.

Other examples of situations where you would not be responsible for transactions made using your debit card include:

  • your card has expired
  • you have cancelled it
  • you have reported that someone else, beyond your control, may know the PIN
  • you reported the card as lost or stolen within a reasonable amount of time.

However, you could be held responsible for amounts taken from your account if:

  • you had not reported the unauthorized transactions, or the card as lost or stolen within a reasonable amount of time
  • you had voluntarily disclosed the PIN to someone else
  • you had kept a written record of the PIN close to the card (for example, on the back of the card or in your wallet)
  • you made fraudulent deposits with your card
  • you refused to cooperate in the fraud investigation.

For more information on the Canadian Code of Practice for Consumer Debit Card Services, contact your financial institution.

The Financial Consumer Agency of Canada (FCAC) makes sure that federally regulated financial institutions comply with this voluntary code of conduct. If you have difficulty getting your complaint resolved, contact FCAC at 1-866-461-3222 (toll-free).


What are phishing and vishing?

Phishing and vishing are two types of scams commonly used by fraudsters to trick someone into giving them personal information they can then use to their advantage. Once they have someone’s personal information, fraudsters will usually try to take money out of the victim’s bank account, use credit cards or open new credit accounts.

  • In phishing, the victim receives a fraudulent e-mail that looks like it comes from a legitimate company, asking them to click on a link that brings the victim to a fake website. The website often can be made to look like the victim’s financial institution’s website, so the victim does not notice the scam. The victim is then asked to enter or verify personal information (such as a credit card number, an online banking password or a Social Insurance Number) that is captured by the fraudster.
  • Vishing is the telephone version of phishing. The victim can be called directly by a fraudster, or can receive an invitation (by e-mail or voicemail message) to call a false customer support telephone number to fix a problem. Once victims are on the phone, an automated service may ask them to key in their account numbers, personal identification numbers (PINs), or passwords using the telephone keypad, or the fraudster can ask the victims to confirm some personal information.

Note that any legitimate company would NEVER ask you to provide your PIN or password over the phone or online.

Example of a phishing e-mail

Here is a sample of a fraudulent e-mail:

a sample of a fraudulent e-mail 

If you suspect phishing or vishing

If you suspect someone is trying to get your personal information either by phishing or vishing, don’t give any personal information until you have verified whether the company is legitimate. If someone phones you to ask you for personal information, ask for the person’s name, the name of the organization and the phone number where he or she can be reached. Then take the following steps:

  1. Look up the organization’s telephone number or website yourself. Look at the back of your credit card statements or other legitimate documents to see if the telephone number or website address matches the one you were given.
  2. Call the company by using the phone number you have looked up yourself to verify that the person that has contacted you is indeed a member of the company’s staff.
  3. Contact the Better Business Bureau in your province or territory and ask questions about the company.

What to do if phishing or vishing happens to you

If you are a victim of phishing or vishing, start a written log of what happened and how you first noticed the fraud. Keep all documentation that you think may be helpful in the investigation. Then, follow the steps below, taking notes on the people you spoke with and exactly what they said:

  1. Contact your local police and file a police report.
  2. Contact the financial institutions, credit card companies, phone companies, and other lenders for any accounts you suspect may have been opened or tampered with.
  3. Contact the two credit bureaus in Canada, Equifax and TransUnion. Ask that a “Fraud Alert” be placed in your credit file. At the same time, order copies of your credit report and review them. Make sure all the accounts and debts that show up on your report are yours. Report any incorrect information to the credit bureaus.
  4. Contact the Canadian Anti-Fraud Centre (CAFC) toll free at 1-888-495-8501 to report the fraud and get advice. The CAFC plays a crucial role in educating the public about specific mass marketing fraud pitches and in collecting and disseminating victim evidence, statistics and documentation, all of which are made available to law enforcement agencies.

What is identity fraud?

Identity fraud (or identity theft) happens when criminals steal your personal information, and use it to identify themselves as you. The thieves can then use this information to make requests or authorize transactions on your financial accounts. These transactions can include:

  • changing your address
  • taking out a new loan or a line of credit in your name
  • ordering an additional credit card
  • transferring funds or withdrawing money.

Since identity fraud usually happens without your knowledge or permission, you may only learn about it when…

  • a credit company contacts you about a credit application you did not make
  • transactions that you haven’t authorized appear on your credit card or bank account statements
  • you no longer receive your account statements
  • a collection agency calls you about a debt that is not yours.

It is often a lengthy and difficult process to resolve identity fraud because imposters usually leave very little trace.

Tips to prevent identity fraud

There are many things you can do to prevent identity fraud from happening to you.

Protect your personal information

  • Put important identification (ID) in a safe place. This includes your Social Insurance Number, birth certificate, passport and any other cards or documents that show your personal details.
  • Before throwing them away, shred all documents that have your personal information (such as your name and address) on them—including old credit card statements or other old ID.
  • Share your personal information only with companies you know and trust. Don’t give out more than you need to.
  • Don’t leave personal information lying around at home, in your vehicle or at the office.

In public places

  • Keep your wallet or purse out of reach of other people—in crowds, in shopping malls and while on public transportation.
  • When making a purchase, keep your card in sight, and make sure that the card returned to you is yours.
  • Carry a minimum number of credit cards or other important personal information with you.

At home

  • Lock your household mailbox if possible. It is common for thieves to look for credit card statements, new credit cards and credit card applications.
  • If you are going to be away, arrange for a trusted neighbour to pick up your mail. You can also go to your local post office (with identification) and ask for Canada Post’s Hold Mail service. There is a charge for this service.
  • Order a free copy of your credit report at least once a year from one of the two credit reporting agencies in Canada, TransUnion and Equifax, to make sure that all the accounts listed belong to you.

On the phone

  • If you did not initiate a phone call, don’t give out any personal information or a credit card number over the phone, even if the caller claims to be from a legitimate company. Instead, get a name and number from the person calling and verify that the number and company are legitimate before calling back.

Online

  • When online, make sure the website you are using is secure (look for the lock icon or the “s” in the “https prefix in the Web address) before transmitting personal information.
  • Ensure that your firewall, anti-virus and spyware systems are up-to-date to protect personal information on your computer.
  • Don’t give out any personal information by e-mail, because it is not a secure method of transmission.

What to do if identify theft happens to you

Start a written log of what happened and how you first noticed the fraud. Keep all documentation that you think may be helpful in the investigation. Then, follow the steps below, taking notes on the people you spoke with and exactly what they said:

  1. Contact your local police and file a police report.
  2. Contact the financial institutions, credit card companies, phone companies, and other lenders for any accounts you suspect may have been opened or tampered with.
  3. Contact the two credit bureaus in Canada, Equifax and TransUnion. Ask that a “Fraud alert” be placed in your credit file. At the same time, order copies of your credit report and review them. Make sure all the accounts and debts that show up on your report are yours. Report any incorrect information to the credit bureaus.
  4. Contact the Canadian Anti-Fraud Centre (CAFC) toll free at 1-888-495-8501 to report the fraud and get advice. The CAFC plays a crucial role in educating the public about specific mass marketing fraud pitches and in collecting and disseminating victim evidence, statistics and documentation, all of which are made available to law enforcement agencies.

Real estate fraud

In Canada, real estate fraud is not as common as other types of fraud (such as debit or credit card fraud). But for the victims, the financial loss can represent a significant loss—since it can mean, in the worst case scenario, losing their home. It is important to know that real estate fraud exists, how it happens and how you can protect yourself against it.

There are various types of real estate fraud. Two types of real estate fraud that may result in financial loss for consumers include title fraud and foreclosure fraud. Read on for more information on each type.

Title fraud

When you buy a home, you buy the title to the property. The lawyer registers you as the owner of the property in the provincial land registry system.

Title fraud starts with identity theft, which occurs when your personal information is collected and used by someone identifying himself or herself as you. There are many ways criminals can steal your identity without your knowledge, including:

  • dumpster diving
  • mail box theft
  • phishing
  • computer hacking.

They then use your identity to assume the title of the property and sell the home or get a new mortgage. For example, if you already own a home, a criminal could fraudulently discharge your current mortgage, transfer the title, secure a larger mortgage and put the home under his or her own name.

Once the money from the sale or new mortgage is advanced, the criminal can leave with the money. You might not be aware of the fraud taking place until after it has been committed. You may find out once the mortgage lender contacts you about mortgage payments you have not made, or someone knocks at your door claiming to be the new owner of the house.

If you no longer have a mortgage on your home or, if you rent out your home to someone else, you might be a target for title fraud because in these circumstances it may be easier for them to use your property title to get a new mortgage or to sell your home.

Foreclosure fraud

Foreclosure is the legal process where a mortgage lender takes possession of a consumer’s home and sells it to cover the mortgage debt the consumer has incurred but has been unable to pay.

In the scenario where a consumer is having difficulty making mortgage payments and facing the possibility of foreclosure, a criminal will take advantage of the situation by offering the homeowner a loan to cover expenses and consolidate loans, in exchange for up-front fees and an agreement to transfer the property title to the criminal. However, in contrast to real debt consolidation programs, the criminal will keep all the payments made by the owner and ignore bills and taxes.

The criminal could also sell the house or re-mortgage it and leave with the money. In the end, the homeowner will lose the home and still be in debt. 

Protect your house from real estate fraud

Because most real estate fraud involves some kind of identity theft, to protect your home from real estate fraud, you should protect yourself against identity fraud first. Read FCAC’s tip sheet, Protect yourself from identity fraud.

You can take other actions specifically to protect yourself against real estate fraud.

  • Contact your mortgage lender first if you are having difficulty making your mortgage payments.
  • Consult your lawyer if you wish to give another person a right to deal with your personal assets, and make sure you cancel this right if you don’t need it anymore.
  • Consult your provincial land registry office to ensure that the title of your home is in your name.
  • Check your credit report regularly to ensure the information is accurate. You can get a credit report for free by mailing your request to one of the two credit reporting agencies, Equifax and TransUnion.
  • Consider getting title insurance. Title insurance covers losses related to title fraud and legal expenses to restore a title. There are two types of title insurance:
    • lender title insurance, which protects the lender until the mortgage has been paid off
    • individual title insurance, which protects the homeowner from losses as long as you he or she owns the home, even if there is no mortgage.

Things to do if you are victim of real estate fraud

As soon as you discover that you might be victim of real estate fraud, you should:

  • contact the Canadian Anti-Fraud Centre (CAFC), a national anti-fraud call centre, at 1-888-495-8501 or info@antifraudcentre.ca)
  • report the situation to the police, and record the police report number
  • report the fraud to the two credit-reporting agencies, Equifax and TransUnion
  • contact your provincial land registry office as soon as possible. Find out what laws may exist in your province to protect you if you are a victim of real estate fraud. Contact your financial institution. Keep all of the documents that provide evidence of the fraud. Record the name of the person you spoke to at the bank, as well as the date and time you called and when you became aware that you are a victim of fraud.

Have you lost control of your finances? How can you beat that debt? Here are ten things you can do to help your situation.

Plan your spending according to your income

1. Keep track of spending and make a budget

One of the smartest things you can do to get control of your finances is to start keeping track of what you spend so that you can see exactly where your money is going each month. This is the first step in creating a budget that shows your income and expenses.

Having a budget and learning to stick to it will help you free up money to reduce your debt. For more information on budgeting, see FCAC’s tip sheet called Making a budget and sticking to it, which explains how to make and keep a budget and includes a budget worksheet.

2. Put needs before wants

Buy what you need first. Eliminate unnecessary expenses and look for things you can live without.

Don’t get into more debt

3. Keep your credit card in your wallet

To avoid getting into more debt, use cash or your debit card instead of your credit card. That way, you’ll be spending money you already have.

4. Avoid “Buy now, pay later” offers

When you’re having problems making ends meet, the administrative fees tied to such offers and high interest rates if you don’t pay on time will only add to your existing debt load.

5. Reduce small, recurring expenses

Saving a little every day can go a long way. Good examples of ways you can save on costs include taking public transit instead of your car, bringing your lunch to work and reducing your coffee consumption. Eliminating that extra $1.50 coffee each workday can mean over $400 a year in savings.

6. Reduce your banking fees

Use automated banking machines (ABMs) from your own financial institution. Review your banking package every now and then to make sure that it is still the best one for you. For more information, see FCAC’s Cost of banking guide interactive tool, which lists ABM fees and helps you compare and choose the best banking package for your needs.

Manage your existing debt

7. Pay down your highest interest rate debts first

If you carry a balance on your credit card, then this is likely the debt with the highest interest rate. Use cash or a debit card while you pay off this debt to avoid accumulating more.

While you pay off the credit card debt, don’t forget to make the minimum payments on other debts with lower interest rates. If you set aside the main part of your income towards bringing the balance down on your most expensive loan, you’ll be surprised at how much you save.

8. Contact your creditors

As soon as you realize that you are having trouble making ends meet, call your creditors and explain the situation. In most cases, they will work out a modified payment plan that will make it easier for you to pay off your debt.

9. Get a consolidation loan with your financial institution

This means getting one single loan to pay off all your existing debts so that you have just one payment to make. For this new loan to save you money, it must have a lower interest rate and a lower monthly payment than all the other loans put together. It is also important to stop using any credit cards that you consolidated into the new loan. For more information on a consolidation loan, talk to your bank or financial professional.

10. Talk to trusted financial professionals

These may include your bank representative, your financial planner or a credit counselling agency. With their help, you will be able to evaluate your current debt situation, determine your present and future needs, make a budget and find ways to pay off the debt. For more information on credit counselling agencies, see FCAC’s Tips for dealing with credit counselling agencies.

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