Creditors use credit bureaus in Canada to check a consumer’s creditworthiness before extending credit. Lenders tend to have a preference for either Equifax or TransUnion, but some will check both. Understanding what a credit bureau is, how they get their information, and how to monitor the information contained in your credit report will help you down the road when you apply with lenders and creditors in the future.
A credit bureau also referred to as a consumer credit reporting agency, is a business that gathers and compiles information regarding a consumer’s credit history from banks, financial institutions, and other organizations, like courthouses and the Office of the Superintendent of Bankruptcy.
A credit bureau uses the information they’ve gathered about individual consumers and creates a credit report and score which then becomes available to a variety of lenders and other financial institutions with your permission. In Canada, there are two credit bureaus: Equifax and TransUnion, that lenders refer to when analyzing your creditworthiness.
There is a common misconception that credit bureaus make lending decisions, however, this is incorrect. A credit bureau is an independent third-party company that relays information between the consumer and the lender. The consumer’s information is made available to lenders by credit bureaus but, at the end of the day, the final lending decision lies with the creditor.
As previously mentioned, credit bureaus collect their information from creditors, lenders and other organizations like the Office of the Superintendent of Bankruptcy. However, it’s important to note that not every lender and creditor reports to both credit bureaus (although, most major lenders do report to both), in fact, some don’t report to either. This can cause a discrepancy between your reports from Equifax and TransUnion, which can lead to multiple different credit scores.
Credit bureaus collect a variety of information including:
As mentioned, your credit scores can vary due to the discrepancies in your credit report. Meaning one credit score is likely better than the other. Knowing which credit bureau your lender checks can help you understand how you’ll look as a borrower. For example, if you know your bank uses Equifax, you can check your Equifax credit report and credit score to see how you stand.
*These financial institutions may pull from either or both bureaus depending on application type.
*These financial institutions may pull from either or both bureaus depending on application type.
You can get your credit report for free from Equifax online or by mail. On the other hand, TransUnion offers Canadians their Consumer Disclosure; which is like a credit report, for free once a month via mail, in-person or online.
A credit pull or inquiry is a request by a lender, creditor, financial institution or any other individual to view your credit report. Third parties can pull your credit report to review your creditworthiness and other details before extending credit. There are two types of credit pulls, hard inquiries and soft inquiries.
Now that you’re more knowledgeable about credit bureaus and how they assist lenders and consumers, you can make use of your new understanding when you apply for credit or a loan in the future. While it may seem small, your credit has the potential to affect numerous aspects of your life.
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Veronica is a writer who specializes in creating unique and educational personal finance content. She has extensive experience writing blog posts for companies in the financial sector. Veronica's background is in accounting as she graduated from Western University in 2017 with a degree in accounting. She is passionate about using her accounting expertise to help others with their personal finance questions and issues and enjoys using her writing to educate Canadian readers. When Veronica is not writing, she enjoys film, reading, travelling, going to the gym, and listening to music.
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