TransUnion vs Equifax
Maintaining a good credit score is an essential component of your financial well-being. A high credit score is integral in order to finance a home or a car purchase, or to secure a new credit card or line of credit. That said, the credit scoring process is still a mystery for most consumers. To complicate matters, your credit score may be different with different bureaus, so which score is best?
In Canada, TransUnion and Equifax are the two bureaus that lenders use to check your credit score and credit report, which allows them to determine whether to lend you money (and how much credit they are willing to extend to you based on your history). Since your score may be different from each bureau, we’ll go over how each bureau weighs your credit history to determine your score, and what that score means to potential lenders.
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When you are applying for credit or in discussions to finance a large purchase, the lender (which can include a bank, landlord, or car company, for example) will request your credit report and score from one of these two bureaus. You will have to give written consent before a lender can request your score (or a verbal consent in certain parts of the country). Your credit score is a 3-digit number that easily provides the lender with an idea of your credit history and how risky it would be to extend you credit.
What is considered a good credit score in Canada?
Your credit is scored on a scale from 300 on the low-end to 900 on the high-end. A score of 600–724 is considered to be “good” according to Equifax; 725-759 is considered “very good,” and a score from 760 and higher is considered to be an “excellent” rating. A score of 300-600 is considered “poor” on the lower scale and “fair” on the high end of the spectrum. According to TransUnion, the average Canadian score is 650.
What is TransUnion?
TransUnion is one of the two credit bureaus in Canada, along with Equifax. TransUnion offers credit reports directly to consumers, as well as to lenders looking to assess the risk of lending money to potential clients. TransUnion allows consumers to access their credit report for free once a year. TransUnion also offers a credit monitoring service for $24.95 a month that helps protect against identity theft and other credit-related safety issues. TransUnion is a private, for-profit company, and is not a governmental institution.
The following banks send scores to TransUnion:
- Royal Bank of Canada (RBC)
- Laurentian Bank
- Bridgewater Bank
The below banks may send scores to TransUnion and/or Equifax depending on the circumstances:
- Bank of Montreal
- National Bank
Credit score app, Credit Karma, takes its credit data from TransUnion as well as Equifax.
What is Equifax?
Along with TransUnion, Equifax is the other credit bureau in Canada. Equifax tracks your credit score by putting together information on your credit history from creditors including credit card companies and auto dealers. Equifax compiles your credit history and credit risk assessment and sells this report to banks, landlords, or any other potential individual or company looking to extend you credit. As with TransUnion, you have to provide your express consent in order for anyone else to request a copy of your credit report. You can request a free copy of your credit report from Equifax once per year. Equifax also offers a consumer protection plan to help thwart identity theft and malicious access to your personal information via its Equifax Complete Premier plan for $19.95 a month. Equifax is a private, for-profit company, and is not directly affiliated with any bank or governmental body.
The following banks send scores to Equifax:
- TD Canada Trust
- Canadian Imperial Bank of Commerce (CIBC)
- Meridian Credit Union
The below banks may send scores to Equifax TransUnion and/or depending on the circumstances:
- Bank of Montreal (BMO)
- National Bank
TransUnion vs Equifax:Why are the credit scores different?
In terms of TransUnion vs. Equifax, each credit bureau weighs your financial history in different ways in order to produce your credit score, which can result in different scores between the two bureaus.
TransUnion uses their own proprietary system to calculate your credit score. Known as the Credit Vision Scoring method, TransUnion analyzes data from a much more recent timespan (24 months) to calculate your score. Depending on your credit history, the more recent snapshot may work in your favor if you’ve recently worked to improve your credit, or may be a factor in reducing your overall score if your credit issues are more recent.
Equifax also uses a calculation dubbed the Equifax Risk Score in order to determine your score. Equifax includes a long-term view of your credit history as part of their calculation (up to 81 months). In addition, as discussed above, not every bank reports to Equifax, which may skew your credit score depending on which bank you are with.
Scores from either TransUnion or Equifax are meant to deliver an overall snapshot of your credit history. While their timeframe and the sources they use to calculate your score are different, neither one is necessarily better or worse than the other.
TransUnion vs Equifax: Credit Reports
In addition to your credit score, inquiring lenders (with your permission) can access your full credit report from either Equifax or TransUnion. Your credit report is a detailed credit history and contains personal information (your name, address, social insurance number, job title) along with an in-depth summary of your credit behavior (how much you owe, if you regularly miss monthly payments, etc.)
While your credit score may differ between Equifax and TransUnion, your full credit report from either service should be fairly consistent (although your particular bank may not report to one service).
How to check your credit scores
You can request to see your credit score for free once a year through the Equifax and/or TransUnion websites. Simply fill out a form your confirm your identity, and they will provide you with your number, free of charge. (You can also print out the form and submit it by mail.)
Both Equifax and TransUnion also offer additional credit services including identity protection and regular credit reporting for a monthly fee.
Other ways to check your credit score for FREE
In addition to accessing your credit score through Equifax or TransUnion, you can also access your credit score for free in Canada through the three companies listed below. Unlike a company or individual accessing your credit score through Equifax or TransUnion, using these services is considered a “soft check” on your credit history and will not affect your credit score.
Borrowell allows users to access their Equifax report and credit score for free. You simply create an account on the Borrowell site with the required personal information and you can then have your report and score sent to you. Keep in mind that Borrowell may then send you information on potential loans, credit cards, or any other services they determine may meet your “profile” (there’s always a catch).
Credit Karma allows you to access your full credit score from both Equifax and TransUnion, as well as your credit report. The service is entirely free, with no “premium” or up-selling options. Once you complete your online profile through the Credit Karma site, you will be able to access your credit report and score. While Credit Karma is entirely free of charge, the company makes a commission from the issuer if you sign up for one of the credit cards they recommend based on your credit needs and profile.
Read our Credit Karma vs Mogo Review to learn more.
You can also get a free credit score from Mogo, the newest company on this list. Once you sign up for a free account on the Mogo site, you will be able to verify your credit score. Mogo then uses your score to offer you loans with an interest rate varying on your credit score. A lower score will land you a potential loan with a hefty interest rate, while a higher score will unlock low-interest loan options. You are under no obligation to take out a loan with Mogo, but offering a free credit score is the company’s incentive to get you to enroll in their financial services.
Read our Borrowell vs Mogo review to learn more.
Borrowell vs. Credit Karma vs. Mogo
Credit Score App
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TransUnion vs Equifax: Our Final Thoughts
Your credit score remains one of the most vital components of your financial security. A high score tells lenders that you are a safe bet, which will allow you to take out credit to help build your financial future, from a credit card all the way to a home mortgage.
Equifax and TransUnion each use their own proprietary systems to determine your three-digit credit score based on a number of factors, including your credit history and behavior. While the exact number may be different from either bureau, the best thing you can do to ensure your credit score improves is to always pay your bills on time, even if you occasionally only pay the bare minimum due each month. Regularly paying down your debt is the best way to improve your credit score and your credit report, which will then make it easier to borrow credit for whatever your future holds.
Frequently Asked Questions
Equifax and TransUnion each use a different system and set of criteria to calculate your credit score. Therefore, neither one is truly “better,” they are just different. Since each bureau takes into account a different timeline of your credit history, depending on your circumstances, your score may be higher with one than the other.
For example, if you once had bad credit but have worked hard in recent years to maintain regular credit payments, your score via TransUnion may be higher since it only looks at the past two years of your history. If the situation was reversed, you may score higher via Equifax, since their system can look at up to 81 months of your credit history, showing a larger overall timeframe which may benefit those whose recent credit history has taken a hit.
In addition, not all banks report to both credit bureaus, which can impact your credit score with one service more than another.
There is a difference between Equifax and TransUnion scores because each bureau uses their own proprietary system to calculate your score. Equifax uses the Equifax Risk Score, while TransUnion employs the Credit Vision Scoring system. Each bureau uses a different credit timeline to calculate your credit score (generally 24 months with TransUnion and up to 81 months with Equifax). In addition, not every bank reports to both Equifax and TransUnion. If your bank doesn’t report to a service, you won’t get a complete picture of your credit history—an important aspect to keep in mind when considering your credit score.
The primary way to improve your credit score is to pay your bills on time. Skipping a bill for even one month can have a negative impact on your credit score. If you can’t pay your bill in full during a given month, be sure to at least pay the monthly minimum. If that is an issue, you should immediately call the company issuing the bill and make a payment plan to ensure your credit score stays on track.
Another important aspect of maintaining a high credit score is limiting the amount you owe vs. the total amount of credit available to you. It’s generally recommended to not exceed 35% of your potential credit; a higher percentage will negatively affect your credit score as lenders will consider you a credit risk.
To improve your credit score, you will also want to limit the amount of credit checks performed. Every time you apply for a new credit card or a loan, the lender will check on your credit report (a “hard” check). Those requests are tallied, and each one can make a dent on your overall credit score, so you will want to keep those requests to the bare minimum. You can still check your credit score without it affecting your overall credit (a“soft check”) through apps such as Borrowell, Credit Karma and Mogo.
While you want to limit the amount of credit checks on your account, having more than one source of credit can also improve your credit rating. In addition to a credit card, you can explore opening a line of credit, which will also generally have a much lower interest rate than a credit card.