Answering the next question from my post titled “teaching kids about credit”
What is a credit bureau? What are the credit bureaus used in Canada?
A credit bureau is a company that collects the credit ratings of individuals and companies and makes them available to lenders, to be able to assess the risk of lending money. A credit bureau will collect information from lenders such as late payments, credit limits, credit being used, etc and make it available to other potential lenders to assess risk. A credit bureau will also have such information as address, phone number, employment information, date of birth of an individual.
Their are 2 main credit bureaus used in Canada.
Equifax and Transunion are the 2 credit reporting agencies in Canada, used by lenders. From my experience Equifax is the most common to be used by lenders, when looking to grant credit. When a person is trying to get approved for a mortgage the average of both will usually be used. When trying to apply for car loans or bad credit car loans most lenders will use Equifax. This being said, their will always be exceptions to this. I have found in my experience that most clients that were from Eastern Canada have a more up to date Transunion and would contain more information, and clients from Western Canada have a more up to date Equifax. This could be coincidence as well. What I do know is credit granting companies have the option to who they wish to report to as a primary. When lenders choose who they want to report to as a primary, they will take a lot of items into consideration like cost to report, amount of clients they are reporting on(monthly), most common bureau, and effectiveness of the reporting. As a lender reporting, we know that Transunion requires fewer reported files on a monthly basis. What does this information mean to a client, probably very little. I, myself, use Transunion, when I notice a client is from the Eastern side of Canada, as I believe it will give me more accurate information. As a client you should be made aware that your 2 bureaus will not be the same. From what I have found with my own bureau, and clients bureaus, almost 0 percent have been the same. I believe that a person should know where both of their bureaus are at all times. This will allow a client to know that they have not been reported incorrectly on either bureau( in regards to identity theft). It is very common for 1 bureau to have a trade line reporting, and the other bureau not showing that exact trade line. I have also found that if a trade line has been cancelled by consumer or credit granter, that trade line might show on 1 bureau and not the other. Both Bureaus have a completely different format and different reporting codes. Please keep in mind that both bureau use a different reporting formula. I will get more into this on another post. To put this in a nutshell, I have found that most lenders will rely on Equifax as the CRA(Credit Reporting Agency) when looking to grant credit. One more thing, its not just the score that lenders take into consideration, its the overall information contained.
Just my 2 Cents