What is a Credit Bureau?

What is a Credit Bureau?

Written by Lisa Rennie
Fact-checked by Caitlin Wood
Last Updated November 29, 2021

Many of your financial decisions directly impact your credit rating. The credit bureaus are the organizations that collect all this pertinent information from lenders, banks, credit card companies, and even courthouses. Basically, any relevant credit info will be recorded at the credit bureaus.

Need help understanding your credit score and credit rating? Look at this.

In Canada, there are two major consumer credit bureaus that gather this information: TransUnion and Equifax. These entities create a credit report for every consumer based on the credit info they’ve collected. They then provide this information to banks and lenders who request it whenever they need to assess a consumer’s creditworthiness and ability to make loan payments.

Read on to find out more about credit bureaus and why they matter to you.

What Do Credit Bureaus Do?

As already mentioned, credit bureaus are responsible for collecting credit info on consumers that lenders and creditors would be interested in when consumers apply for a loan or credit. All the information they gather is collected into a neat little package in the form of a credit report.

But what they don’t do is make any lending decisions. They’re not the ones who decide whether or not you would be eligible for a loan. Instead, they just supply the info lenders need to make that important decision. Every lender has their own criteria that they follow when it comes to approving or rejecting loan applications.

Canadian Credit ScoreCredit bureaus also calculate your credit score, learn how here

What Type of Data is Reported to the Credit Bureaus?

The type of information that is reported to the credit bureaus includes:

  • Name
  • Address
  • Inquiry information (when you apply for a loan or credit)
  • Credit account information
  • Public record information (such as judgments or bankruptcy)
  • Collections information

Read this to learn why a collections account may have disappeared from your credit report.

Where Does The Data Collected Come From?

TransUnion and Equifax both get their information from creditors and lenders that consumers deal with. So, any creditors that you have dealt with in the past will be the ones reporting their information to the credit bureaus. More specifically, your payment history and account status are provided to credit bureaus, as these are the two more important factors that influence your credit report and score.

That said, not all lenders and creditors report information to the credit bureaus, which means both entities might have different information. In addition, each credit bureau might have its own credit scoring model that they follow that calculates your credit score. As such, your credit score could vary between the credit bureaus.

Click here to know which credit bureau your lender might check.

Who Else Uses Your Credit Info?

Lenders and banks use the information collected by credit bureaus to make lending decisions. But there are other entities that are also interested in the information that the credit bureaus may have, including:

  • Landlords
  • Employers
  • Cell phone companies
  • Utility companies

Essentially, any company that has a valid reason to get a copy of your credit report may do so with your permission.

How Does Bad Credit Affect Daily Life?Check out this infographic to learn how bad credit can affect your daily life. 

Why Should You Get a Copy of Your Credit Report From a Credit Bureau?

All consumers should obtain a copy of their credit report from one of the major credit bureaus at least once a year. In fact, consumers have the right to get a copy for free every 12 months.

It’s important to review your credit report on an annual basis in order to see where you stand as far as your credit is concerned. You can learn a few things from your credit report, and if your credit score isn’t where it could be, you can take steps to make improvements to your credit score and financial situation.

Did you know that all Canadians have two credit reports? Learn more

Another reason to pull your report is to verify that all information contained in it is correct. If there are any errors, your credit score could suffer. Even the smallest errors can cause your credit score to dip, so it’s important to identify any errors. If you do spot any, they should be immediately reported to the credit bureau and be investigated and rectified.

Final Thoughts

Your credit report is important, and the credit bureaus in Canada are the places to go to obtain this critical credit profile. If you’re looking to apply for a loan in the near future, the information contained in this report will play a key role in whether or not you can get approved. If you’re looking to improve your credit score or want to apply for a loan, let Loans Canada help. Get in touch with us today.

Lisa has been working as a writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same. She's used a variety of financial tools over the years and is currently growing her money with Wealthsimple, while stashing some capital in a liquid high-interest savings account so that she always has a financial cushion to fall back on. She's also been avidly using her Aeroplan TD credit card to collect as many Aeroplan points as possible to put towards her travels!

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