- What are Equifax and TransUnion?
- Why are there differences between the reports in Equifax and Transunion in Canada?
- What are the implications of these differences for consumers?
- Why is it important to review both your Equifax and TransUnion reports?
- How to get a free copy of your credit report from Equifax and TransUnion in Canada
- Help for Canadians
In Canada, your credit score is a big deal. Your credit score allows you to get approved for loans and mortgages and even predict your chances of forgetting that job. But what happens when you check your credit score and you see two scores staring back at you?
Canada has two major credit bureaus, TransUnion and Equifax. Both of them play a crucial role in your finances. While both are equally important, the discrepancies in their credit reports can leave you confused.
What are Equifax and TransUnion?
Equifax and TransUnion are independent companies that collect and maintain your financial history. This includes your credit accounts, payment history, and debt collections.
This information is condensed into your credit report, accompanied by a credit score, a three-digit number that summarizes your creditworthiness. While both Equifax and TransUnion provide an accurate picture of your credit and financial health, subtle details and data variations can lead to discrepancies in your report.
Why are there differences between the reports in Equifax and Transunion in Canada?
There are a lot of factors that cause the discrepancies. Here are a few reasons that cause these variations:
Date Range: Time plays an important role. Equifax will look deeper into your past, meaning it will take into consideration your credit history for the past seven years, and old accounts may still haunt your credit report, while TransUnion focuses more on your recent accounts, only taking into consideration your credit history for the last two years.
Collection Accounts: Collection accounts can remain on one credit bureau’s report longer than the other. Equifax may keep a collection account on your report for several years even after it has been paid off, while TransUnion removes it quickly.
Different types of Accounts: From the credit bureaus’ standpoint, not all accounts are created equal. Equifax and TransUnion assign different weights to different types of accounts. One example is that for Equifax, active credit card accounts hold a higher regard compared to student loans, but for TransUnion, they may give your Employment history more weight. These weighing differences can influence your overall credit score.
Hard Inquiries: Your loan applications or credit card inquiries trigger hard inquiries, which can affect your credit score differently based on the credit bureau. Equifax keeps your inquiries on record for two years, while TransUnion removes them after a year. If you have recently applied for a mortgage, it could temporarily lower your Equifax score more than your TransUnion score.
What are the implications of these differences for consumers?
These discrepancies, even if minor, can have real-world consequences. A few points can significantly impact your chances of securing loans, obtaining favorable interest rates, and even securing rental agreements. Here are some tips for managing your credit report effectively amidst these variations:
- Become familiar with both reports: Checking your Equifax and TransUnion reports regularly helps you stay informed about discrepancies and potential errors.
- Identify and dispute errors: If you find errors in your report, dispute them immediately with the respective bureau. This ensures accurate information is reflected in your score.
- Monitor your credit utilization: Regardless of the bureau’s scoring model, maintaining a low credit utilization ratio (ideally at 10%) positively impacts your score.
- Practice responsible credit habits: Making timely payments and avoiding late payments across all accounts will consistently improve your score across both bureaus.
Why is it important to review both your Equifax and TransUnion reports?
Understanding the factors behind discrepancies in your Equifax and TransUnion credit scores is crucial for several reasons:
1. Avoiding Confusion: If you want to make wise financial decisions, it’s essential to understand your credit score. However, credit scores can be complicated and confusing. The good news is that you can better grasp what it means and how it affects your finances by breaking it down into simpler parts. This will help you make informed choices without getting overwhelmed by the numbers.
2. Proactive Credit Management: It’s essential to check your credit reports regularly so you can spot and fix any mistakes as soon as possible. This helps ensure that the information on your credit history is correct and can help you get better financial options in the future.
3. Building a Strong Credit Profile: By understanding how each bureau assesses your credit, you can tailor your financial behaviour accordingly. This includes optimizing your credit utilization, diversifying your accounts, and maintaining a positive payment history across all creditors.
4. Accessing Favorable Rates and Terms: A good credit score is essential because it can help you get lower interest rates on loans, mortgages, and credit cards. This means you can save money when borrowing. To keep your credit score healthy, you must be mindful of your credit and ensure it’s consistent across different credit bureaus.
How to get a free copy of your credit report from Equifax and TransUnion in Canada
Both Equifax and TransUnion offer their own free credit report programs, though the frequency and features may vary:
Equifax:
Here are some highlights about requesting a free copy of your Equifax credit report:
- You can request it online, by phone, by mail, or in person.
- If you choose to make a request by phone, you will be asked to provide your Social Insurance Number.
- If you request by mail, you must send documents verifying your identity and address.
You are entitled to free credit reports from the two nationwide credit reporting agencies. There are four ways you can request a free copy of your Equifax credit report:
TransUnion:
A Consumer Disclosure is a detailed document that shows all the information on your credit report. It’s required by law to make sure that all the information is accurate. This document includes all the times that anyone has looked at your credit report, including businesses and yourself. The version of the report that businesses see is called the “Business Version,” and it’s a shorter version of the Consumer Disclosure. The Business Version only shows the information that businesses need to make decisions about lending you money or approving you for credit.The Business Version does not contain:
- Account management inquiries.
- Non-credit related inquiries.
- Your inquiries to obtain a copy of your credit information.
*Quebec Residents:
If you live in Quebec, there’s a new law that says you have the right to see your credit score and the factors that affect it. This information will be included in any document you receive about your credit, called a “consumer disclosure”. This change will take effect on February 1, 2021.
You have the right to obtain a copy of your Consumer Disclosure, free of charge, by mail or in person.
Help for Canadians
At Kenny Johnson University, we understand that repairing credit can be a challenge for Canadians. We offer comprehensive credit repair services to help you achieve your financial goals. Our team of experts will work closely with you to identify and address any negative items on your credit report, develop a personalized credit improvement plan, and guide you through building a more robust credit profile.
Here’s what sets us apart:
- Experienced and knowledgeable team: Our team comprises of specialists who are passionate about helping Canadians overcome credit challenges.
- Personalized approach: We tailor our services to your unique needs and circumstances to ensure the most effective results.
- Transparent and ethical practices: We believe in honesty and transparency throughout our process.
- Convenient contact options: Reach us via email, live chat, or phone call to discuss your specific credit situation and receive personalized advice.
Ready to take control of your credit and unlock a brighter financial future? Contact Kenny Johnson University today!
