Understanding credit scores is essential for financial well-being, and many individuals track their scores through both TransUnion and Equifax, the leading credit bureaus. However, it’s common to notice differences between these scores. In this article, we will explore the reasons behind the discrepancies between TransUnion and Equifax credit scores, what constitutes a good credit score in Canada, and how to access your credit score for free.
To comprehend the variations in credit scores between TransUnion and Equifax, it’s crucial to grasp how these scores are determined:
In Canada, credit scores typically range from 300 to 900. The categorization of credit scores may differ slightly:
Several factors contribute to discrepancies between TransUnion and Equifax credit scores:
TransUnion and Equifax employ proprietary algorithms for score calculation, and these algorithms are likely to differ. For instance, Equifax uses the Equifax Risk Score, while TransUnion uses the CreditVision Scoring model. These models consider various credit factors and timeframes, leading to variations in scores.
Creditors and lenders may report data to either TransUnion or Equifax, but not both. This results in one bureau having more recent or comprehensive credit data, which can affect scores.
TransUnion and Equifax may interpret credit utilization differently. Equifax may emphasize credit utilization ratios (credit used compared to total available credit), while TransUnion may focus on trends in credit utilization over time. These distinctions can influence credit scores.
Each scoring model places varying importance on factors like credit history length, types of credit accounts, and payment history. These differences can contribute to score disparities.
Discrepancies in credit reports, such as inaccuracies or errors, can influence credit scores. Regularly reviewing credit reports from both bureaus can help identify and correct such issues.
Accessing your credit score directly from TransUnion or Equifax usually involves a fee of approximately $20. However, you can obtain your credit score for free through Borrowell (Equifax) and Credit Karma (TransUnion), both of which provide monthly updates.
These companies generate revenue through commissions when users apply for recommended credit cards or loans on their websites, making the credit score service entirely free. Additionally, the monthly updates simplify credit monitoring for potential issues such as identity theft or fraud.
If you prefer to obtain only your credit report (without the credit score) directly from the credit bureaus, you can do so for free once a year:
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