With the introduction of Quebec Bill 53 in September 2019, consumers in the province have been granted a new level of protection when it comes to their credit. This new legislation has had a major impact on the way credit is managed, with consumers now able to freeze their credit in order to protect against identity theft and other forms of fraud.
Below, we will explore the impact of Quebec Bill 53 and the consumer credit freeze, and how it has changed the way people manage their credit in the province. We will also look at the potential implications for lenders and other financial institutions. By understanding the details of this new legislation, it is possible to make more informed decisions about credit and its usage.
Overview of Quebec Bill 53
In response to the data breaches at Group Desjardins in 2019, which impacted approximately 2.9 million Canadians, Quebec implemented Bill 53. This law is intended to safeguard consumers from potential fraud and identity theft, as well as to prevent unauthorized credit applications. Bill 53 proposed a consumer credit lock as a form of protection.
Quebec Bill 53 is a new piece of legislation that has had a major impact on the way credit is managed in Quebec. This change has been significant for both consumers and lenders, as it has now made it much easier for people to protect their credit files.
Credit freezes are now standard practice in all industry sectors in Quebec, and the legislation has put in place a clear and easy process for consumers to freeze their credit files. They are free and remain in place until the consumer chooses to remove them, making them an effective tool for preventing fraud and identity theft.
How the Consumer Credit Lock Works
When a consumer freezes their credit file, it means that it is inaccessible for everyone except those who have been granted permission. While the freeze is in place, no one is able to obtain a credit check and it becomes impossible for anyone to open a new line of credit in the consumer’s name.
In the past, it was necessary to contact each of the major credit bureaus and request that they freeze your file. Now, it is possible to place a freeze through one central website. This makes the process significantly easier than before, and an online service is available in both English and French.
If an inquiry is made regarding the consumer's report, this lock will generate a response of "7 - Report Unavailable - Consumer Has Locked Their Credit File".
Credit freezes remain in place until the consumer decides to remove them, and it is possible to freeze and unfreeze your file at any time.
Impact on Consumers
The most significant impact of this legislation is that it has made it much easier for consumers to protect their credit files. In the past, it was necessary to place a fraud alert every 90 days in order to protect against identity theft. With a credit freeze, consumers now have a more effective tool at their disposal, making it easier to protect their credit.
The Consumer Credit Lock does not come into play when a person's credit rating is calculated and thus, it has no bearing on the score. Regardless of a lock being in place, credit assessments will still be updated and calculated.
Seeing as this service is only obtainable to residents of Quebec, people who do not live in the province will not have access to it. The only people who can use the Consumer Credit Lock are those who have an address in Quebec registered with Equifax.
In the majority of cases, member numbers will not be excluded automatically, meaning most inquiry agents won't receive the consumer's credit file data unless specifically instructed. The consumer will be given a list of all the member numbers, so they can indicate which ones should be left out.
Certain industries, such as Collections, Insurance, and Mortgage Insurers, will be automatically excluded from the lock-out.
Impact on Lenders
Excluding certain scenarios, when an individual's credit report is locked, it will obstruct the credit assessment procedure. Lenders must contact the consumer to free the record and keep advancing with the application. Furthermore, once it is unlocked, moneylenders will have to submit another request for the consumer's credit report.
Equifax does not offer an automated reprocessing of the transaction from its platform. To keep the loan process from running into a disturbance, it is recommended that the lender remind the consumer to lift the active lock on their credit file after acquiring consent to access the credit bureau document.
In order to guarantee that customers don’t think their request for credit was turned down due to the file lock, Equifax will provide them with a message specifying that the file needs to be unlocked in order to be reprocessed.
Keep track of your credit score
Even if a person can put a lock on their credit record, they should still be concerned with their credit rating. This is because credit ratings will continue to be computed and updated regardless of the lock. Thus, it's wise for people to make an effort to keep track of their scores, particularly if the score is below 670.
To ensure your credit score won’t drop, you must: ensure you pay your bills on time, as this has the greatest impact on the credit score; limit your credit usage to no more than 30%, as this is the second most important factor; and, abstain from applying for any new credit, as this demonstrates to lenders that you are not able to properly handle the credit available to you.
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