Credit ratings are used to grade your payment history and whether you pay back credit on time.

If you have a credit account with an R7 credit rating, the debt owed is being repaid through either a consolidation order, orderly payment of debts, consumer proposal, debt management program or a credit counselling agency.

In this guide, you’ll learn what an R7 credit rating means, how long it stays on your credit report, and how it affects your credit score.

What are credit ratings?

In Canada, a credit rating is a letter and number code sent from the lender to the credit bureaus (Equifax and TransUnion) and applied to each credit account on your credit report.

The letter refers to the type of credit, while the number indicates whether your credit history is good or bad. Credit ratings can have a positive or negative impact on your credit score.

For example, if you make a credit card payment on time, it is recorded as R1.

An R1 credit rating on an Equifax credit report.
An R1 credit rating for a credit card account on an Equifax credit report.

The number increases if the payment is late.

Payment history on credit reports - credit ratings

Other factors affect a credit rating too.

If a credit card debt is sent to collections or included in a bankruptcy filing, an R9 will appear on the account.

Credit rating codes

A credit rating starts with a letter referring to the type of credit used: I, O, R or M.

Letter Meaning Example
I Installment credit
You borrow money for a specific period. You make regular payments in fixed amounts until you pay off the loan.
Car loan
O Open status credit
You may borrow money up to a specific limit when you need to.
Mobile phone account
R Revolving or recurring credit
You may borrow money up to your credit limit on an ongoing basis. You make regular payments in varying amounts depending on the balance of your account.
Credit card
M Mortgage loan
Mortgage information may be included in your credit report.

Credit ratings use a number between one and nine to report whether payments are made on time.

Number Meaning
  • Too new to rate
  • Approved, but not yet used
  • Paid within 30 days of billing
  • Pays as agreed
  • Late payment: 31 to 59 days late
  • Late payment: 60 to 89 days late
  • Late payment: 90 to 119 days late
  • Late payment: more than 120 days late, but not yet rated “9.”
  • This code isn’t used
  • Making regular payments through a consolidation order, orderly payment of debts, consumer proposal, debt management program or a credit counselling agency
  • Repossession
  • Written off as a “bad debt.”
  • Sent to a collection agency
  • Bankruptcy

Source: Government of Canada: Understanding your credit report

What is an R7 credit rating?

When you repay your debts through a consumer proposal or debt management plan, each credit account is given a 7 rating to tell future lenders that you are repaying these debts through a debt relief program.

7 credit rating for credit accounts in a consumer proposal

Credit cards and other revolving credit accounts show an R7 credit rating. A loan account gets an I7 rating because it’s an installment account.

Where does an R7 rating appear on my credit report?

An R7 credit rating code is added to each revolving credit account.

A description appears alongside the rating code to inform lenders that you are making regular payments to settle the debt.

Your creditors will update the rating code on the credit account to a 7 with a rating code description stating that the account was included in a consumer proposal.
An R7 credit rating for a credit card account on an Equifax credit report.

How long does an R7 stay on your record?

An R7 credit rating stays on your credit report for 3-6 years.

If it’s an Equifax credit report, it disappears three years after you’ve completed the debt program or six years from the date you started (whichever happens first).

For TransUnion credit reports, an R7 disappears three years from the date you satisfied the terms of the debt program or six years after the date you defaulted on the account (whichever date comes first).

How does R7 affect credit score?

An R7 affects your credit score, but the upside is that you are settling debts that are causing a negative impact.

Getting credit during this time is difficult, but your credit score is probably already poor if you have unpaid debts. Even if you’re approved for credit, you’ll pay higher interest rates.

The priority should be to deal with your debt. Then you can start to improve your credit score with a clean slate.

Can I get a mortgage with an R7 credit rating?

You won’t be eligible for a mortgage with a prime lender. They want to see a good credit history for the first two years after completing a program such as a consumer proposal or a debt management plan.

During this time, try to add new lines of credit, such as a loan or credit card, with limits of at least $2000 each. Make payments on time and keep a good credit utilization ratio to help rebuild your credit.

R7 vs R9 credit rating: What’s the difference?

If your credit report displays an R7 rating, you have entered into a consumer proposal, debt management plan, orderly payment of debts, or another debt program. An R9 means you have declared bankruptcy. Both affect your credit rating.

Is an R7 credit rating bad?

So how bad is an R7 credit rating for your credit score?

An R7 rating damages your credit, but a good credit score is useless if you have large debts.

The good news is once you have resolved your debts, you can rebuild your credit faster.

If you have questions about R7 credit ratings or need debt relief, talk to a Licensed Insolvency Trustee for free.

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