RBC student line of credit ruins your credit score

smanmit2 wrote: ↑ Learned this hard way. I got a student line of credit from RBC. Unfortunately, the neither the advisor nor the agreement states that taking student line of credit will continue to impact your credit score you pay off the loan. Why? It is because the way they set up the loan and how they report to Equifax.

This loan will always show 100% utilization of debt even though you keep paying the monthly repay amount along with interest. Debt utilization is the second biggest factor negatively impacting your score (30%). SO PLEASE AVOID TAKING THIS LOAN AT ALL COST AS IT WILIL CONTINUE DEGRADING YOUR SCORE UNTIL YOU FULLY PAY THE LOAN. For detail example, see below:

Assume that you have no other debts except this student line of credit. Assume that the original loan was for $10,000. Month 1 you pay $1000 as repayment. The new balance is $9000. However, the way they report to Equifax is that I have line of credit of now $9000 and it is fully utilized. They keep on doing this until the balance is 0. This is a glitch in RBC and they don’t care about it. Equifax also acknowledges that they have several such cases but RBC takes no action.

iamthebest wrote: ↑ I have a RBC study loan (backed up by the government) and doesn't have your issue.

smanmit2 wrote: ↑ What you mean by backed up by government? If you have student line of credit, you have this issue. Check with RBC and question them on utilization. I already got RBC acknowledge the issue and Equifax is also aware of this with RBC.

smanmit2 wrote: ↑ It does not report correctly. Both RBC and Equifax acknowledges. Loan is never shown 100 utilization. There is a separate code for that. Check with your back and ask them with the example I gave.

smanmit2 wrote: ↑ Actually repayment is when the real problem starts. As soon as it goes in repayment mode, it will show reducing balance with 100 utilization. Unfortunately that’s how they are reporting it. Confirmed.

smanmit2 wrote: ↑ Actually repayment is when the real problem starts. As soon as it goes in repayment mode, it will show reducing balance with 100 utilization. Unfortunately that’s how they are reporting it. Confirmed.

smanmit2 wrote: ↑ What you mean by backed up by government? If you have student line of credit, you have this issue. Check with RBC and question them on utilization. I already got RBC acknowledge the issue and Equifax is also aware of this with RBC.

gemenichic wrote: ↑ It is a good point to be aware of how the student lines are report to the credit bureaus.

I had an RBC loc that was ‘converted into a loan’ after graduation. However, this conversion is simply a change on RBC internal systems and externally/credit bureaus it still shows up as a line. Therefore, every loan payment reduces the balance, but it always shows up as a maxed line. The credit bureaus do show my regular loan payment as the last payment amount.

This reporting has meant that when I was looking for a mortgage I had to go to RBC and get them to write me a letter confirming that this is in fact a loan and confirm the payment amount. Because it is still reporting as a maxed out line the other banks were calculating tdsr based on a 3% of the balance as the minimum payment when in fact my regular loan payment was a fraction of the 3% calculation.

On the flip side RBC was the only bank that approved me without a guarantor and based simply on my credit score and post graduation earning potential .

So just something to keep in mind if looking for a mortgage/other lending and you have an RBC loc that has been converted to a loan.