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 a credit card, mortgage, auto loan or any other financial product. It plays a huge role in the amount of interest you pay back on top of your loan repayments and even the amount of money you’ll be able to borrow. So, what role do TransUnion and Equifax play in all of this?
We recently discussed what your credit scores say about you and this could all depend on your credit history or where you check your score. Your credit score is a number ranging from 300-900, with 650 being the ideal credit score to obtain financial products such as loans and credit. 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 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. This allows them to develop a credit score and report 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 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 score 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 Score-Up and Mint Budgeting App. It offers a wide range of consumer products such as the ability to freeze and unfreeze your credit for free. It also gives you the option to subscribe to paid services that give you more features to manage your credit information
Equifax, headquartered in Atlanta, US, 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. This applies to both Equifax and TransUnion which is what makes both of them unique. Each reporting agency uses your payment history, length of credit history, credit card utilization and derogatory marks on your credit report to calculate your score.
Your credit report is a list of data that your credit bureau has and then uses to produce your report. So, each reporting agency may have slightly different data and use a different scoring model, which could explain why our credit score differs and why each credit bureau is different.
It’s extremely difficult to tell what scoring model your agency is using, and which score is the most accurate. 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 to regularly check for errors. You can resolve this around your credit report and its accuracy. To find out more ways to improve your credit score, check out 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. If you’d like to begin your journey today to a better financial future, check out our Maestro courses here.
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Your credit score is an important aspect of your financial life. But you’ve probably noticed, that your score varies depending on where you check it. Let’s learn why, and how TransUnion and Equifax play a role in this. Find out more at learn.mymarble.ca.