This woman says that a bank’s mistake ruined her credit score (and it could happen to you)

Vivian always had excellent credit. She loves to shop — Korean and French pharmacy skincare products, linen blouses from Madewell, presents for friends — but is also careful, even studious, about paying down debt. An example: in 2013, she graduated with $20,000 in student loans. She got a job at a bank, kept living with her parents, and paid the whole thing down in 18 months.

Before last year, Vivian had never actually checked her credit score or even knew what the numbers meant. But a financial advisor she spoke to before opening a bank account a few years ago told her it was “really good” for someone her age. She had multiple credit cards, and never applied for credit limit extensions — banks and credit card companies just gave her automatic upgrades on the regular. The equation seemed simple. She would always pay her bills on time; in return, she was trusted.

At the end of 2017, though, American Express rejected her credit card application.

Vivian was confused. The card, which she’d applied for through Scotiabank, had a lower credit limit than another Amex card she used to have but had since stopped using. She was still paying all her bills on time; she was also making more money than she used to, when she was being approved for credit cards without issue.

“I was like okay, that’s weird,” she says of the rejection. “And I tried again in a month and a half. And I got declined again.”

Vivian called Scotiabank, where a representative told her to contact a credit bureau; there was nothing the bank could do. So she paid for a credit report at TransUnion and found out her credit score was below 580.

Credit scores fall anywhere on a spectrum between 300 and 850. Financial institutions consider scores of 700 or higher to be “good”, and most people register between 600 and 700 — a range that will get you approved for the more favorable lines of credit on the market, which tend to be offered by A-lenders and feature lower interest rates. According to credit reporting agency Experien, scores that fall between 580 and 669 are merely “fair.” They also rank only one category above the worst possible range of scores: 300 to 579, or “very poor”.

Vivian called Scotiabank, where a representative told her to contact a credit bureau; there was nothing the bank could do

Vivian’s discovery caused her to panic. But it also set off a series of negotiations that deepened her understanding of the credit system — and our vulnerability in an economy that defines people in terms of their relationship to debt.

When Vivian first applied for the Amex card in November, she had no other credit card. Earlier that year, she’d moved back to Vancouver from Los Angeles, where she had been working for the past several years at a video game company. The most credit cards she’d ever had at once was four, but she cancelled the rest and kept one card — the Amazon.ca Rewards Visa — by the time she left the U.S. When Chase Canada shut down the Amazon card in the spring, she decided to shop around before committing to a new one. That’s how she found the Amex.

After she got her credit information in January, Vivian immediately started to investigate. How did her credit score get to be so low? What had she done wrong — and why hadn’t anybody told her that she’d made a mistake?

The mistake, it turned out, was not hers. She found an outstanding charge of $65 on one of her old credit cards — one that she’d asked TD to shut down shortly after she’d moved back to Vancouver almost a year ago. “I had brought enough cash to pay it off when I closed my account,” she recalls. The teller took the money, she says, paid off the outstanding balance, and confirmed that the card had been closed. Vivian then asked the teller to shut down everything she had with TD — which included a chequing, savings, and U.S. dollar account — because she had decided to bank elsewhere instead.

Vivian immediately started to investigate. How did her credit score get to be so low? What had she done wrong — and why hadn’t anybody told her that she’d made a mistake?

Because Vivian was under the impression that her TD credit card had been paid off, and believed that both the card and her TD accounts were defunct, she didn’t monitor activity on them. So the balance kept accruing interest, and eventually went to collections. By the time Vivian found out about it, it had been in collections for four months. And her credit score had already plummeted.

Vivian recalls that when she was at TD to shut down her accounts, the teller who was helping her out was a new trainee. But, she says, it never occurred to her that that would be an issue. “The person that was actually doing this for me was being trained. But they had a person telling them what to do the entire time. And that person actually also took over and just had the new person [the trainee] shadow them and just watch.”

In the year after she closed down her account, Vivian didn’t have any reason to believe that anything was wrong — TD never contacted her, nor did any of the credit bureaus. She wasn't contacted by the collections agency, either. 

“I never got a phone call from anyone. I never got mail from anyone,” she says. She did move to a new home after she closed down the account, but “we paid for mail forwarding, so we would’ve received any mail had they sent us any.

“When I closed my account with the bank, they said, oh you don’t have to worry about it, everything’s already taken care of,” she said. “You’ve already paid off your card. You don’t have to update your new address because you’re closing your account. You’re not doing business with TD bank anymore. Why would you need to update it? So I just listened to the teller.”

'I never got a phone call from anyone. I never got mail from anyone,' she says

What followed was a series of confusing — and sometimes conflicting — pieces of advice on what course of action Vivian should take next. When she called Visa, the credit card company advised her to talk to TD — and pay off the outstanding balance. She then went to TD, where a representative gave her a letter detailing their mistake, and told her to mail it to TransUnion. Frustrated, Vivian then posted about her predicament on the subreddit r/PersonalFinanceCanada (the post has since been deleted), where multiple people insisted that paying her outstanding balance, as per Visa’s advice, was tantamount to admitting that she was responsible for TD’s mistake. By that point, however, Vivian had already paid the balance.

So she went back to TD. The bank sent a request to the credit bureaus, asking that the $65 balance be removed from Vivian’s credit history. “This was in April,” Vivian says. “And to this day, nothing’s changed. Nothing’s changed with my credit.”

The kicker, she adds, is that her low credit score makes it harder than ever to build her credit back up — or even access her credit information at all. Without access to a credit card, she has few ways to build her credit back up; she could probably get approved for an unsecured card — one with a very low credit limit of a couple hundred dollars, “like you would give to an 18 year old,” she says — but because your credit takes a hit when you apply for a credit card, she is reluctant to take this route. And because she has no recent credit activity, she can’t even access her credit information easily: TransUnion’s verification process online and over the phone requires you to answer questions about recent transactions. “I don’t have any recent things to verify my identity with,” Vivian says. “So I have to mail in my request.”

“A person’s personal information is easily mishandled and it could be life altering due to simple human error,” Vivian says. At the moment, her parents are able to lend her financial support if she needs it, and she acknowledges how lucky she is — and how many others don’t have access to the same resources.

“If I were in a situation where I needed to rent an apartment and they needed to do a credit check, I could be homeless right now.”