When you’ve worked hard to complete a consumer proposal and get back on your financial feet, it’s frustrating to still see remnants of it lingering on your credit report. We hear this all the time, especially when someone is preparing for a mortgage renewal or applying for new credit.

So let’s clear up what should be there, what shouldn’t, and what to do if your credit report hasn’t caught up with your reality.

How long does a consumer proposal stay on your credit report in Canada?

Most consumer proposals are structured to be five years in duration. Typically with a fixed payment amount over sixty months.

Equifax and TransUnion handle consumer proposals a bit differently, but the general rule in Ontario is:

• Equifax: A consumer proposal is removed three years after the date of completion or 6 years from the filing date, whichever comes first.
• TransUnion: The proposal and related accounts stay on your file for three years after completion or 6 years from the date you defaulted on the debt, whichever comes first.

That means if your proposal was completed early, say, in early 2022, it should have been fully cleared off (purged from) your report by early 2025 at the latest. This is true even if you filed your proposal only months before paying it off completely.

Purging rules may differ slightly across provinces and territories, so please check directly with the credit reporting agencies to learn their rules.

What should be removed, and what should remain?

Here’s the important part. When your consumer proposal is cleared from your credit report, it should disappear from both the public records section and from each individual account that was included in the proposal.

If you’re still seeing account notes that say things like:

“Account closed, included in proposal”
“Written off as part of a proposal”

even though the proposal itself no longer appears, those notes are stale, and frankly, they shouldn’t still be there.

Why these leftover notes still matter

Even if your balances are showing as $0 and the accounts are closed, those negative remarks can still impact how lenders see you.

Mortgage lenders in particular use Equifax data heavily, and if their underwriter sees a bunch of charge-off-style language, like “settled through proposal” or “included in proposal”, they’ll often treat you like you’re still in the recovery phase, even though you’ve done the hard work and moved on.

Worse, if you apply for credit and are denied, based on that outdated information, that rejection could damage your profile further. You don’t want to be penalized again for something you already resolved.

What you should do next

If you’ve completed your consumer proposal and enough time has passed, but you’re still seeing old notes on your credit report, it’s time to clean it up.

Here’s what we recommend:

1. Get a current copy of your credit reports from both Equifax and TransUnion. Make sure you’re reviewing the full reports, not just the consumer summaries.
2. Flag all accounts still showing proposal-related comments. Take screenshots or highlight them, these are what you’ll dispute.
3. Don’t apply for any new credit or mortgages until these are corrected. A premature application could lead to a rejection, and that rejection will be visible to future lenders.
4. Work with a professional to dispute the items.
   For example, Richard Moxley, a CMT contributor, is one of Canada’s most knowledgeable experts on credit file accuracy and disputes. He knows how to deal with Equifax and TransUnion directly and effectively.

The bottom line

Once your consumer proposal is behind you and enough time has passed, your credit report should reflect a clean slate. If it doesn’t, that’s not your fault, but it is your responsibility to fix it before moving ahead with major financial steps like mortgage renewals or new applications.

Don’t guess your way through this part. A few lingering notes can cost you thousands in higher rates, or even a flat-out decline. Get your credit file properly updated, and you’ll be in a much stronger position to move forward with confidence.

We previously wrote about how homeowners in consumer proposals might pay off their proposal ahead of the customary five years.

The traditional argument holds: While buying a home can build long-term equity and stability, renting can provide flexibility and fewer upfront costs. But as home ownership becomes a far-fetched dream for many young Canadians, can renting for life be a viable option?

Alex Avery, author of The Wealthy Renter, thinks so.

“It’s different for every person, and each individual’s needs change over time, but I’m still a firm believer that renting is a great option,” he said.

Despite rental prices having soared since publishing his book in 2016, Avery says renting is still cheaper and carries less risk than buying.

“People compare mortgage payments to monthly rental rates, but mortgage payments don’t begin to cover the full costs of home ownership,” he said. These costs can include notary fees, realtor commissions and region-specific taxes when purchasing the property as well as ongoing costs such as mortgage interest, property taxes, insurance, and various maintenance and repair expenses.

Avery was inspired to write his book during what he calls was a “speculative bubble” in the housing market at the time that he said created a perception of home ownership as an “easy out for savings,” especially in urban centres like Toronto and Vancouver.

“[Young Canadians] were being pressured to buy a condo when the math never made any sense,” he said.

Vancouver realtor Owen Bigland’s calculations paint a different picture however. With average monthly rent for a one-bedroom unit in his city now hovering around $2,800, a lifetime renter could spend at least $1.3 million by the time they’re 65 (not accounting for rent increases or inflation), according to Bigland.

“And you’ll have zero to show for it. Where’s the savings here?” he questioned.

Even if monthly rent was cheaper than a mortgage payment, Bigland said many Canadians will likely spend any savings rather than invest it and grow their wealth.

“A lot of Canadians don’t have the discipline to save as much as they should,” said Sebastien Betermier, an associate professor at McGill University who studies Canadian household spending.

With rents making up at least a third of household expenditures, and homes making up 70% to 80 % of homeowners’ wealth portfolios, Betermier says both renters and homeowners alike are exposing themselves to big risks.

Recent data from a survey by the Healthcare of Ontario Pension Plan and Abacus Data suggests the same. More than a third of Canadians report having less than $5,000 in savings, and those who own a home are increasingly relying on their home equity to fund their retirement.

Bigland preaches home ownership for this very reason. He encourages chipping away at your mortgage and building equity so you can benefit from any price appreciation in the future.

“The only real cash shelter we get in Canada is the principal residence exemption,” he said.

Put another way, “you’re essentially renting [the home] from yourself,” said Betermier. He adds that your home can act as collateral should you need to borrow against it someday. Most mortgages from big banks typically include a built-in home equity line of credit at a favourable rate, according to Bigland. “It’s accessible money without selling your home.”

Avery, however, doesn’t buy this argument.

“It presupposes that housing is a safer investment than other investments,” he said. “There are many places where house prices have gone down, where employment prospects change over time.”

As an alternative to relying on your home as an investment, Avery suggests putting your money into an RRSP, TFSA, and the FHSA which doesn’t necessarily need to go toward a home purchase. “You can learn about index ETFs too. There’s a lot of different ways to invest your money,” he said.

Avery, who’s gone the home ownership route himself, doesn’t think buying is a bad decision, but warns against it if you’re banking on it as an investment tool.

“That’s conflating two different objectives,” he said. “One is to house yourself, and the other is to generate wealth.”

But Bigland, who’s also written a book on real estate and stock investing, says you should be doing both. He agrees renting can make sense in some situations like if you’re anticipating a change in jobs, but you should consider buying if you can commit to a location for eight to 10 years.

He suggests first-time buyers start with older buildings close to public transit often sitting on valuable pieces of land. “You’ll probably have a developer [buy] in 10 or 15 years, and that might be your exit strategy,” he said. “Even if you’re a blue-collar guy, if you can get $40,000 down, maybe even forgo the car for a little while, you can do it.”