Individual objects to the real-time accuracy of credit score

PIPEDA Report of Findings #2013-008

August 21, 2013

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An individual objected to how a credit reporting agency calculated her credit score. The issue was how the credit reporting agency used an amount owing from a past court judgment. In that judgment, the individual is named as a debtor for a substantial amount. According to the individual, her credit score was impacted unfairly since the judgment information did not represent the actual real-time balance owing. She believed this inaccuracy prevented her from getting credit. Therefore, she asked the reporting agency to update that information and retroactively recalculate her credit score. She was also concerned that two written consumer statements she had submitted were not included in her credit file. She claimed these statements provided important qualifying information about the judgment debt. The credit reporting agency replied that retroactively recalculating a credit score is not possible since the score is a continuous, real-time calculation, based on ongoing activity in the consumer’s credit file.

The agency also explained that it has no reliable source for regularly updating payments and the balance owing on past judgment amounts. For example, court records ─ the agency’s source for judgment information ─ do not contain that information. The agency also pointed out that only the total number of court judgments on an individual’s file can impact their calculation of credit scores, not the amount specified on a court judgment. Finally, the credit agency admitted that it had neglected to advise the individual that the statement she had submitted was too long to be included in her file.  In her determinations, the Assistant Privacy Commissioner agreed that it was not feasible for the agency to accurately report updated payment/balance information in the complainant’s credit file due to the apparent lack of a reliable source. Further, since this information was not used in calculating the complainant’s credit score, it was not necessary to recalculate the individual’s credit score retroactively. She also acknowledged the limited space available for consumer statements. However, she noted that the reporting agency should have advised the individual that her statements were too lengthy to be included in her file. This would have given her an opportunity to amend her personal information statements and resubmit them under Principle 4.9.5.The Assistant Privacy Commissioner thus found that the matter concerning amending personal information by the addition of consumer statements was well-founded and resolved. The other matters raised in the complaint were not well-founded.

Report of Findings

Complaint under the Personal Information Protection and Electronic Documents Act (the Act or PIPEDA)

1. The complainant alleges that a credit reporting agency (the respondent or the agency), failed to amend personal information in her credit file, specifically information relating to a court judgment on a bank loan and foreclosure.

Summary of Investigation

Court Judgment

2. The complainant was a director/shareholder of a limited company involved in a project to construct and sell a real estate development. The complainant’s company had obtained a loan from a bank to finance the project. The complainant was a personal guarantor on the loan.
3. The bank later demanded repayment of the loan and began the process to foreclose. Ultimately, the court awarded a judgment to the bank, naming the complainant as a debtor.
4. The complainant then noticed that the judgment, represented by a large amount of money, appeared on her credit report, despite the fact that payments had been made to significantly reduce that amount.
5. The complainant claimed that her credit file should have included these payments as well as the resulting balance. In her view, since this did not happen, her credit score had been unfairly lowered to the point where she could not secure other financing to pay off the balance of the debt.

Complainant’s Requests for Amendments

6. The complainant made the three following requests to the respondent:
   1. update her credit file using information about payments and indicating the new balance owing on the court judgment;
   2. retroactively recalculate her credit score; and
   3. attach two consumer statements (drafted by the complainant) to her credit file so as to qualify the information already contained therein^{Footnote 1}.
7. The complainant claimed that the respondent did not action her requests. Consequently, she submitted the current complaint with this Office, which we accepted.

Respondent’s Position

8. In its representations to our Office, the respondent stated that it retrieves and reports information about judgments to maintain as accurate a profile as possible for credit reporting purposes. The respondent asserted that without that judgment information, credit information associated with an individual would be inaccurate and the respondent would be providing an incomplete picture of the individual to its clients.
9. The respondent then addressed the three requests that the complainant had made (see above):
   1. With respect to the request to report the complainant’s payments and balance owing for the court judgment, the respondent explained that this particular level of detail is not readily obtainable from Canadian court records ─ which are the respondent’s source of information of this type. The respondent reports when a judgment has been satisfied, but until then does not have reliable information to indicate the balance owing or the payments that have been made.
   2. On the calculation of credit scores, the respondent explained that it cannot retroactively recalculate a credit score: “Because credit files can be updated every day, the score is recalculated continuously (i.e., in real-time). This means that a credit score from a month ago is probably not the same credit score today, depending upon the activity in the consumer’s credit file.”
   3. With respect to not attaching the complainant’s consumer statements to her credit file, the respondent stated that the statements’ total number of characters exceeded the maximum allowable for that purpose in the complainant’s file. Our Office confirmed the respondent’s explanation and calculation, based on information about the maximum limit available on the respondent’s Web site.^{Footnote 2}
      
      The respondent added that its consumer relations department should have followed its internal procedure which directs consumer relations representatives to send a letter to the consumer requesting him/her to resubmit a shorter narrative (being approximately four lines of text). As a result of this complaint, the respondent looked into the matter and found that its consumer relations representative had overlooked this procedure.
10. The respondent clarified that, for the way it calculates credit scores, the number of judgments registered against an individual can affect the individual’s credit score, but that the amount of, or balance owing on, any judgment is not considered part of the algorithm used to determine the score.
11. During our investigation, we learned that the consumer protection act for the complainant’s province of residence stipulates that six years after a judgment is given, a credit reporting agency must cease to include in an individual’s report information about the judgment, unless the judgment creditor (or its agent) confirms the judgment remains unpaid in whole or in part and the confirmation appears in the credit file.

Judgment Debt Satisfied

12. During the course of our investigation, the complainant’s judgment debt was paid off in full. The complainant confirmed that the respondent had updated her credit file accordingly to indicate that the judgment was “satisfied”.

Application

13. In making our determinations, we applied Principles 4.6 and 4.9.5 of Schedule 1 of the Act.
14. Principle 4.6 stipulates that personal information shall be as accurate, complete and up-to-date as is necessary for the purposes for which it is to be used.
15. Principle 4.9.5 states that when an individual successfully demonstrates the inaccuracy or incompleteness of personal information, the organization shall amend the information as required. Depending upon the nature of the information challenged, amendment involves the correction, deletion, or addition of information. Where appropriate, the amended information shall be transmitted to third parties having access to the information in question.

Findings

16. The first issue to consider [see item (i) in paragraph 6] is the allegation that the respondent, pursuant to Principles 4.6 and 4.9.5, should have included details on the complainant’s credit file about payments made against a court judgment while the judgment was still outstanding. The complainant alleged that in the absence of this information, her credit score was unfairly lowered.
17. Our investigation established that this payment history information was indeed not shown in her credit file as alleged. Rather, the respondent made a deliberate decision to indicate the court judgment along with the monetary value assigned for that judgment.
18. Based on the evidence before us, we are satisfied that payments and balance owing information is not available from the public records from which the respondent obtains its information regarding court judgments, nor does it appear that there is another reliable source for this information. In our view, it was therefore not feasible for the respondent to report this information on the complainant’s credit file in an accurate manner. Even if the respondent were to have updated the complainant’s credit file with the current balance owing based on the information she provided, it could not have ensured the continuing accuracy of this information.
19. Furthermore, the respondent clarified that it is the number of judgments that can impact the way it calculates an individual’s credit score, not the amount of each judgment or the balance owing on a judgment. Thus, the lack of the payments and balance owing information did not impact on the complainant’s credit score as alleged.
20. For these reasons, we are satisfied that the respondent met its obligations under Principles 4.6 and 4.9.5 with respect to the first issue.
21. The second issue [see item (ii) in paragraph 6] is the complainant’s allegation that the respondent, pursuant to Principle 4.9.5, should have retroactively recalculated her credit score and, in so doing, taken into account what the complainant deemed to be incomplete information on her file.
22. Since we have found that the respondent was not required to have included the payment and balance owing information, and that, in any event, this information was not used in calculating the complainant’s credit score, it follows that the respondent was not required to carry out a recalculation. Furthermore, we accept the respondent’s position that it cannot recalculate a credit score retroactively since a credit score is a real-time calculation ─ in other words, a snapshot based on specific information available at a given moment.
23. For these reasons, the second issue is not well-founded under Principle 4.9.5 of the Act.
24. Lastly, the third issue [see item (iii) in paragraph 6] is the allegation that the respondent should have attached the complainant’s consumer statements to her credit file, pursuant to Principle 4.9.5.
25. The consumer statements contained additional information to qualify certain information contained in the complainant’s credit file. The statements also exceeded a pre-established limit for the number of characters.
26. The relevant provincial consumer legislation stipulates that an individual may give to a reporting agency an explanation or additional information that relates to the information kept by the reporting agency about the individual. We accept that the complainant’s credit file was incomplete without the additional information contained in the statements.
27. We also accept the respondent’s position that, for the practical reason of ensuring economy of space, it may refuse to attach to a credit file consumer statements (serving to explain or qualify information in their file) that are beyond a certain length. The respondent explains this character limit on its Web site. As well, we noted that the relevant provincial consumer legislation stipulates a comparable space limit (100 words).
28. However, we underscore the importance of a standard procedure to advise individuals when their statements must be revised and re-submitted to the respondent due to, for example, unacceptable length. Unfortunately, despite the respondent having such a procedure, it appears that an error of omission occurred in this case, resulting in the complainant not being alerted to the character limit and therefore unable to post, or amend the length of, the additional information with the respondent.
29. Thus, for the above-stated reasons, the respondent contravened Principle 4.9.5 with regard to the third issue.  
30. We note that, in the course of the investigation, the respondent offered to attach a consumer statement, of the acceptable length, as drafted by the complainant. In the circumstances, the complainant declined to provide a consumer statement.

Conclusion

31. Accordingly, we conclude that the matter concerning amending personal information by the addition of consumer statements is well-founded and resolved. The other matters raised in the complaint are not well-founded. 

Other

32. In May 2013 our Office released an interpretation bulletin on accuracy^{Footnote 3}, a new guidance document for private sector organizations and the public. It offers them insight and guidance to understand how the OPC has interpreted and applied the Accuracy Principle (Principle 4.6). 
33. The parties to this complaint may wish to consult this bulletin to enhance their understanding of our interpretation and application of the Accuracy Principle.