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You changed the ways you handled money.
You worked on your spending to make your savings grow.
You transformed yourself from a finance noob to an expert - You did everything and everything in your might to build credit.
Still, you’re yet to see any fruit of your hard work. What could go wrong? Why isn’t your score increasing and your bad history decreasing?
Well, have you checked in with your lender? Is the company reporting to the credit bureaus? Yes! Good credit habits can only pay off if reported to top credit rating agencies in Canada.
You might be doing everything for a perfect credit profile yet fail to build it just because your financially responsible nature isn’t being presented to the bureaus.
Yes, they are that important! Need to know more about the top credit bureaus? We Got You!
Credit Bureau In Canada - What Is It?
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A credit bureau is a rating agency that collects all the data about your financial matters from traditional banks or credit card companies. For instance,
- Credit History
- Open, Closed, And Inactive Accounts
- Credit Cards
- Credit Mix
- Bankruptcy
These are some of the financial data a credit bureau in Canada collects of consumers.
So what do they do with all this information? Compile it to create your credit report.
In fact, they utilize all this data to calculate your score. But, of course, they’re not completely free to do so. They work per the guidelines of the FCRA when it comes to compiling, comparing, and disclosing your financial data to lenders.
What Are The 4 Major Credit Bureaus In Canada?
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When you say credit bureaus in Canada for consumers, usually two top agency names come to mind:
- Equifax
- TransUnion
Of course, you might also be familiar with Experian. However, when it comes to business credit, the company that tops the searches is:
One thing to note here is that not all collection agencies are considered credit bureaus or credit reporting companies. The reason being not all the collection agencies report their information forward.
So, only those who do can be considered the credit bureaus who are responsible for generating your credit report and calculating your Equifax credit score.
So, let’s discuss the top credit reporting agencies in detail:
1. Equifax
Equifax is a worldwide data organization aiming to help Canadians live better financial life.
And how do they do it? By comparing all the data collected and compiling it to create a credit report, specifically the Equifax credit report.
Moreover, they emphasize on following financial factors to do that:
- Payment History (Recent, Old)
- Used Credit (Percentage of your credit limit)
- Available Credit (Credit limit percentage left at the month's end)
- Credit History (Length, Age of your cards, etc.)
All these key points are then used to calculate the Equifax credit score that can decide the chances of the following aspects:
- Applying for the mortgage,
- Buying your dream car,
- Secure flexible insurance,
- Bag that high-salary job, etc.
The working methodology, score calculation, and reports are similar to every consumer credit reporting agency. However, you might still notice different scores on every report.
We’ll explain the reason later in the guide.
2. TransUnion
Similar to Equifax, TransUnion Canada aims to help Canadians improve their credit scores by analyzing a free credit report every year.
In fact, according to the data provided on their website, the agency claims to be more than just a bureau as they offer to support consumer’s debt reducing plans.
3. Experian
It is a multinational data reporting agency that collects personal and corporate data. In fact, according to the real-time report, Experian manages almost 3.7 million financial information of private or public companies in Canada.
Experian promises to help Canadians make better financial decisions on both personal and professional levels.
This data collection agency usually calculates FICO score and generates credit reports based on that.
4. Dun & Bradstreet
As we said earlier, D & B is a data collection agency that deals with the financial matters of a business company. The agency collects the corporate data from a number of different sources. Some of them include:
- Legal offices,
- News,
- Media houses,
- Payment histories,
- Mobile company data, etc.
In fact, it’s needless to say, they have a discrete data house that provides business with a clear view of where they financially stand. Moreover, they might also provide solution-driven business analysis in their report to help businesses with their money management.
Which Of The Top 4 Credit Bureau Is Most Accurate?
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When it comes to data collection, Equifax is the largest bureau. However, considering the credit score calculation and credit report generation, Equifax, Experian, and TransUnion work almost in a similar manner.
Of course, the credit calculating factors vary for D & B as it deals with the corporate finances.
See: Top 10 Credit Questions Canadians Mostly Ask!
Do All The Credit Bureaus Generate Same Credit Score?
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The moment of the truth is here!
You just read how all the top credit bureaus in Canada work so, is there a possibility that their credit score and report is also the same?
The simple answer is: NO!
Let us explain the reasons why:
- The method they use to calculate the score might differ.
- The data collection source may vary from company to company.
- The information they receive from the lenders may also change.
Yes, as we said earlier, not all the lenders report their consumer data to the bureaus. So, depending on that the credit scores they generate also differ.
Is Credit Reporting Important?
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Yes, credit reporting is crucial for your financial stability!
In fact, a good credit score is the key to securing loans, mortgage, job, insurance, etc. So, if the credit reporting of your card company is not on point, the bureaus won’t put you in a perfect credit score range.
As a result, the chances of you enjoying the credit card perks decrease.
That’s why it’s so important to check in with your bank, credit, or secured credit card company whether or not they report your payment history to the top bureaus.
Final Verdict
Credit cards provide welcome bonuses, discounts, travel miles, and so many offers that can help you save money and improve your financial life. Of course, you need to learn to use the credit card the right way but all your efforts will be in vain if the company you chose is wrong!
It is that important as the bank or company you choose must report to the credit bureaus or else you can’t enjoy any benefits of having a credit score. But what exactly is a credit bureau? How does it work? Is there any top agency in Canada that’s better at calculating scores than others?
Find answers to these and other questions in this one guide.
