Case Studies

Communication Gap Leads to Credit
Rating Confusion

The Problem

Case study:
What can be learned: the expert's advice Read More

From the Client's Perspective

A client applied for and received a RBC CreditLine for Small Business, a credit card which he used solely for his business. Due to an oversight by his bookkeeper, the company missed several payments. When the client discovered the problem, he immediately paid off the balance owing. Later, he found that the credit bureau had lowered his personal credit rating. He complained, saying that when he applied for his card, he made a point of signing for it in his business capacity only, and hadn't been advised that his personal credit rating could be affected.

From RBC's Perspective

According to Card Services, the CreditLine for Small Business application asks for information on both personal and business credit histories. The credit is approved based on an assessment of both. Thus, if an account is in arrears, credit bureaux will reflect the fact in both personal and business credit ratings.

The Resolution

The Office of the Ombudsman reports, "The problem here was a communication gap.

"We examined the original application and confirmed that the client had completed and signed it only on behalf of the company.

"Technically, the bank should have gone back to him at that point and explained that the card also required a personal commitment. Instead, the application was approved as it was.

"Our office also found that the fact that the card applies to both personal and business credit wasn't spelled out clearly enough in the literature - leading to the misunderstanding about liability.

"We recommended that the bank change all the relevant marketing literature and forms to communicate the facts clearly.

"The bank agreed to restore the client's personal credit rating and to change the literature."

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