Your credit score plays a huge role in your financial life. Whether you like it or not, this three-digit number is the deciding factor on whether you’re approved for credit cards, mortgage, auto loan or any other financial product. There are many factors that influence your credit scores, such as your credit utilization ratio, whether you have a thin credit file, your payment history and more.
Most importantly, your credit score plays a huge role in the amount of interest you pay back on top of your loan repayments and even what credit card balances you will be approved for. Whether you have a secured credit card or an unsecured credit card, it’s important to be aware of the fair credit reporting techniques of the credit bureaus. So, what role do TransUnion and Equifax play in all of this? And how do you find out if you have good credit or bad credit?
We recently discussed what your credit scores say about you and this could all depend on your credit history or where you check your credit score. Your credit score is a number ranging from 300-900. A 650 credit score is the optimal credit score to obtain financial products such as loans, a credit card and sometimes, a credit limit increase. A credit score is formed from your credit report. It’s there to give creditors, banks and lenders a quick snapshot of how reliable and trustworthy you are when it comes to paying back loans and handling debt.
Who are the major credit reporting agencies in Canada?
Your credit reports and credit scores are compiled and tracked by the leading credit bureaus in Canada; Equifax and Transunion. If you’ve ever had a secured credit card or an unsecured credit card, or any form of loan in Canada in the last ten years, Equifax and Transunion are sure to have your information and credit history on file in the form of a credit report. Using the information reported to them, they form a credit report, and they then create a credit score for you. Usually, companies such as credit coaching websites, lenders and banks pay these two credit bureaus to access your files successfully and consensually assess you as a risk.
With there being two major credit bureaus, let’s check out what makes them unique:
TransUnion is based in Chicago, USA. It is an international credit- and a data-reporting company that provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people in more than 30 countries. TransUnion offers Canadians their credit report and credit scores while offering solutions for ways they can improve their overall financial wellness.
A lot of different credit score apps and websites use TransUnion as their source of data such as MyMarble Premium’s Score-Up and Mint Budgeting App. To get your credit scores fast, you can sign-up to MyMarble today.
Headquartered in Atlanta, US, Equifax is a multinational credit-reporting agency that operates in 11 countries, including Canada. Equifax tracks consumer data for millions of Canadians and offers a range of business and consumer products.
Like TransUnion, they offer a range of products such as a credit lock product and a comprehensive credit-monitoring solution. They serve a wide range of companies such as financial institutions, healthcare providers, insurance companies, government agencies, and other types of businesses.
What’s the difference between Equifax and TransUnion?
We recently discussed why different websites may give you different credit scores and learned how each reporting agency uses different scoring models to create your credit score. Both Equifax and TransUnion use their own unique credit scoring models, which help to create your unique credit score. Each credit reporting agency uses your payment history, length of credit history, credit utilization rate and derogatory marks found on your credit report, to calculate your credit scores fast. This information is provided to them when your creditor reports positive or negative payments to them.
Then, your credit report is a list of data that your credit bureau has compiled for you from the information reported to them. They use this information to create your credit scores. Most importantly, each credit reporting agency may have received different data from your lender or credit, and use a different scoring model to calculate your score. This could explain why our credit scores differ, and why each credit bureau is different. In addition, no credit score or credit report is more important than the other.
It’s impossible to tell what scoring model your agency is using. We can all admit that credit scoring is a complicated system and one that may not seem very consistent. One way you can ensure your credit score is accurate is to begin financial planning and regularly check your credit report for errors. You can ensure your credit report is accurate by requesting your credit report from both credit bureaus. To find out more ways to improve your credit score, check out MyMarble Premium’s Score-Up online here.
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Our Maestro Financial Literacy Platform allows you to enroll in over 25 different modules for free, to help you improve your financial fitness. This includes courses in credit scores and reports, budgeting and debt management. You can begin learning more about what impacts your credit scores, such as your credit utilization ratio and payment history. If you’d like to begin your journey today to a better financial future, check out our Maestro courses here.
Improve Your Credit Score With MyMarble
Regardless of what your credit report says, and what your credit score is, there are ways you can improve your credit score. With MyMarble Premium Score-Up, our financial technology solution will help you improve your credit score through point deduction technology. Our leading technology allows you to work towards your desired credit score, within your budget, by allowing you to create a target credit score based on your financial plans and credit history. Find out more about how you can improve your credit score and reach your financial goals here.