Quebec’s Bill 53 is a piece of legislation that was passed in 2020 with the intention of protecting Quebec consumers from identity theft and fraud. As of February 1st, 2023, consumers will be able to place a credit lock on their consumer report.
The Consumer Credit Lock affects all credit agreements, from mortgages and car loans to credit cards and lines of credit.
What is Quebec’s Bill 53 and the Consumer Credit Lock?
Quebec’s Bill 53 was enacted as a response to the data breaches that occurred at Group Desjardins in 2019 that affected close to 2.9 million Canadian consumers. To protect consumers against potential fraud and identity theft, as well as to prevent new credit obligations from being established, Bill 53 proposes a consumer credit lock.
This lock will return a code of “7 – Report Unavailable – Consumer Has Locked Their Credit File” when there is a request for information on the consumer’s report.
How does Quebec’s Bill 53 Impact Consumers?
The Consumer Credit Lock presents an advantage to consumers since any information on the credit report will not be delivered to requestors without the consumer’s consent. This means that if a requestor plans on using data for uses such as entering into a credit contract, increasing credit, extending credit, or entering into contracts (car lease, cellphone payment plans, etc.), the consumer will first have to suspend or unlock the credit file in order to grant the requestor access to the information on the file.
Will it have an impact on a consumer’s credit score?
The Consumer Credit Lock is not considered when a consumer’s score is being calculated and therefore has no impact on a consumer’s score. Credit scores will still be updated and calculated even if there is a lock on a consumer’s file.
What if a consumer moves outside of Quebec?
Since the Consumer Credit Lock is only available for Quebec residents, it will not be available to non-Quebec residents. It will only be available to consumers whose address on their Equifax file is within Quebec.
Are there any exemptions?
Unless specified by the consumer, most member numbers will not be exempt. This means that most requestors will not receive any of the consumer’s credit file information unless the consumer specifies otherwise. The consumer will receive a list of all member numbers and should use this list to specify which member numbers should be exempt.
Some industries such as Collections, Insurance, and Mortgage Insurers will automatically be exempt.
How does the Consumer Credit Lock affect Lenders?
With certain exceptions for use cases, when a consumer’s credit file is locked, it will interfere with the credit assessment process. Lenders must get in contact with the consumer to unlock the file and proceed with the application. Additionally, lenders will need to make a new request for the consumer’s credit file once it is unlocked.
Equifax does not have an automated reprocessing of the transaction from its platform. To keep the loan process from encountering a disruption, it is highly suggested that the lender remind the consumer to remove the active lock on their credit file when consent to access the credit bureau file is obtained.
In order to ensure that consumers don’t believe their application for credit was denied because of the file lock, Equifax will provide them with a message stating that the file needs to be unlocked in order to be reprocessed.
Reports will be sent to the consumer concerning non-processed transactions due to the lock and newly unlocked files that can be reprocessed.
Managing Your Credit During the Consumer Credit Lock
Even if a consumer can lock their credit file doesn’t mean that a consumer shouldn’t worry about their credit score anymore. In fact, since credit scores will still be calculated and updated regardless of a lock on a person’s file, consumers should still make the effort to better their scores — especially if that score falls below 670.
If you want to improve your credit score, be sure to do the following:
Pay your bills on time
The most significant contributor to your credit score is your payment history. If you fall behind on many of your payments, your credit score might take a huge hit. If you do find yourself falling behind, contact your creditors as soon as you can to let them know when you’ll be able to pay them.
Don’t use up more than 30% of your credit
The second largest contributor to your credit score is your credit utilization — the amount of credit you have versus the amount of credit you use. A good rule of thumb is to try to keep your credit utilization to a maximum of 30%. This will ensure that your credit score won’t drop and will even save you from having to pay tons in interest in the long term.
Don’t apply for new credit
The only time in which you should apply for new credit is if you want to build your credit history or if you want a card with lower interest rates. Even so, you should only apply for new credit if your current credit score is in good standing. If you’re planning on applying for new credit in order to be able to make ends meet, contact a Licensed Insolvency Trustee (LIT) instead, since this is usually a sign that you need financial help.
A Licensed Insolvency Trustee can help you get out of debt by finding the best solution to your personal financial situation. Dealing with debts can be scary — your LIT will make sure you don’t have to face them alone.
