If you routinely vet your credit report and track your credit scores from the two main credit bureaus (TransUnion and Equifax), you may have noticed that they can be a bit different.
Credit scores are a measure of your creditworthiness and are used by lenders to determine how much of a risk you pose when they lend you money. If your credit score is poor, it means you are not good with other people’s money and you will either not qualify for credit or will be required to pay more in interest charges for credit.
Equifax and TransUnion have their custom in-house algorithms for calculating your credit score which may result in one score being different from the other. In general, a good credit score in Canada is 650 and above. You can assess where you stand as per below:
- 800 – 900: Excellent credit score
- 720 – 799: Very good
- 650 – 719: Good
- 600 – 649: Fair
- 300 – 599: Poor
I paid to view my credit score once in 2015 when we started thinking about buying a home and I wasn’t 100% sure what my credit looked like. Since then, I have viewed my score multiple times for FREE through Borrowell and Credit Karma.
These 2 companies provide monthly updates (both credit score and report) that make it easy to monitor my credit profile and prevent identity fraud or theft.
TransUnion Canada vs. Equifax Canada Credit Scores
Earlier, I mentioned that I signed up with Borrowell and Credit Karma to receive monthly updates of my credit score and report. Why did I sign up for both of them?
I did so because Borrowell gives me an Equifax credit score and report while Credit Karma supplies me with a TransUnion credit score and report. The credit scores from these two main credit bureaus in Canada can be significantly different and I want to see both.
Why are the Credit Scores (TransUnion vs. Equifax) Different?
When I last checked my credit score, TransUnion scored me at 830 while my Equifax score was 802 – a difference of 28 points. Their credit reports were similar other than that a recent credit card inquiry for my Triangle World Elite Mastercard was not reflected on my Equifax (Borrowell) credit report. So why the difference?
1. Different Algorithms and Metrics
The algorithm used by Equifax and TransUnion is proprietary to each company and most likely different in how they compute your score. Equifax makes use of the Equifax Risk Score while TransUnion uses the CreditVision Scoring model. Both range from 300 to 900 which is the credit score range in Canada.
Information available online show that Equifax uses an 81-month credit history. On the other hand, TransUnion’s CreditVision Risk Score looks at data over the past 24 months.
2. Credit Reporting by Lenders
The information that credit bureaus use in computing your score is based on what lenders report to them. Some lenders only report to one credit bureau while some report to both. For example, I have had my Triangle World MC for about 5 months already, but it is not showing up on my Equifax credit report.
The opening and closing of accounts is a factor that impacts and can lead to a difference in your score. Even if a lender reports to both credit bureaus, it may do so on different dates, potentially leading to discrepancies in your credit score.
While Equifax and TransUnion may apply different weightings to them, the most important factors determining your credit score are your:
- Payment history
- Credit utilization
- Length of credit history
- Mix of credit
- Public records e.g. bankruptcy
- Hard enquiries on your account
Read more about how your credit score is calculated here.
How To Check Your Credit Score For FREE in Canada
If you want to obtain your credit score directly from TransUnion and/or Equifax, be prepared to pay around a $20 fee. However, you don’t have to pay any money at all! Borrowell (Equifax), Credit Karma (TransUnion), and Mogo offer free and updated monthly credit scores to Canadians.
These companies make money (commissions) when you apply for a credit card or personal loan recommendations through their website. From my experience with Borrowell over the years, I get around one email per month informing me that my credit score has been updated and it may also contain some suggestions of credit cards I may qualify for. The credit score service is absolutely free.
My experience with Credit Karma is similar, and you can simply unsubscribe from receiving email updates and login to your account only when needed.
The monthly score updates make it easy to monitor your credit for any potential problems e.g. identity theft or fraud. If you notice an odd drop in your credit score, you can quickly check your credit report to see whether someone opened a credit card in your name, or there has been a credit inquiry on your account that was initiated by you, for example.
Here’s how you can dispute errors on your credit report.
Credit bureaus are obligated to provide you with one free credit report per year upon request. If you’d rather obtain your credit report from them (sans the credit score), you can contact them as follows:
Equifax: Order by phone at 1-800-465-7166 or download the request from their website and mail it to National Consumer Relations, P.O.Box 190, Station Jean-Talon, Montreal, Quebec H1S 2Z2 or by fax to 514-355-8502.
TransUnion: Access a copy online or copy their form and mail to TransUnion Consumer Relations Dept., 3115 Harvester Road, Suite 201, Burlington Ontario ON L7L 3N8.
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Why is TransUnion vs. Equifax credit score different? This is mostly due to the different formulas (algorithms) used by the companies to compute your score. My TransUnion score started assessing my credit score as ‘excellent’ when I reached 800, whereas, for Equifax, I qualified for ‘excellent’ status since my score was around 760 or so.
What is a good credit score in Canada? A score of 650+ appears to the consensus for entry into the “good credit” category. A higher credit score will help you qualify for better terms when you borrow money.
What is the average credit score in Canada? As per Equifax Canada, the average credit score in Canada is 692 which qualifies as ‘good.’ Check this ultimate guide to Canadian credit scores.
How can I increase my credit score? Want to improve your credit score? Check out these 8 easy ways to raise your credit score fast.