Updated: April 2025  |  bremo.io financial guides

How Credit Scores Work in Canada — Equifax and TransUnion

Canada has two major credit bureaus: Equifax Canada and TransUnion Canada. These are private companies that collect financial data about you and use it to generate a credit score. Lenders — banks, credit unions, car dealers, landlords — use your credit score to assess how risky it is to lend you money or extend credit.

The Two Bureaus: Equifax and TransUnion

Equifax and TransUnion operate independently. They collect data from lenders, utilities, and other creditors, and each bureau may have slightly different information on file for you. It is normal for your Equifax score and your TransUnion score to differ by 10 to 30 points. Lenders sometimes check only one bureau; others check both.

Both bureaus use the FICO scoring model as the industry standard in Canada, though they also have their own proprietary scoring systems. Scores range from 300 to 900 in Canada.

What Data Goes Into Your Credit File

Your credit report contains several categories of information:

• Personal information: Name, address, date of birth, SIN (Social Insurance Number) — though SIN is not always required and should be provided carefully
• Credit accounts: Credit cards, lines of credit, mortgages, car loans, student loans
• Payment history: Whether each account was paid on time, late, or not at all
• Credit inquiries: Records of who has accessed your credit file and when
• Public records: Bankruptcies, consumer proposals, judgments
• Collections: Accounts sent to collection agencies

How the Score Is Calculated

The scoring formula weights different factors based on their predictive value for future credit behaviour. Here is the approximate breakdown used by major scoring models in Canada:

• Payment history (35%): The most critical factor. On-time payments build your score; late or missed payments damage it.
• Amounts owed / utilization (30%): How much of your available revolving credit you are using. Lower is better.
• Length of credit history (15%): How long you have had credit accounts. Longer history signals stability.
• Types of credit (10%): A mix of credit cards, loans, and lines of credit is viewed positively.
• New credit (10%): Recent applications for credit. Too many in a short period is a yellow flag.

How Lenders Report to the Bureaus

Banks, credit card issuers, auto lenders, and mortgage providers report your account activity to one or both bureaus every month. They report your balance, your credit limit, your payment status, and whether you made your payment on time. Not all creditors report to both bureaus — some report to only one, or neither.

The Difference Between a Credit Report and a Credit Score

Your credit report is the raw data file — every account, every inquiry, every payment. Your credit score is a number generated from that data. You can access your credit report for free from both Equifax and TransUnion in Canada. Your credit score is a separate product that the bureaus charge for in real time, though many banks and apps now provide free score monitoring.

How Long Information Stays on Your File

Negative information does not stay on your credit file forever. Here are the standard timelines in Canada (these may vary slightly by province):

• Late payments: 6 years from the date of the delinquency
• Collections: 6 years from the date of last activity
• Bankruptcy (first): 6 to 7 years after discharge
• Bankruptcy (second or more): 14 years
• Consumer proposal: 3 years after completion
• Hard inquiries: 3 years (but impact fades after 12 months)

Why Your Score Can Differ Between Equifax and TransUnion

Because Equifax and TransUnion are separate companies that receive data independently, not every lender reports to both bureaus. This means one bureau may have more complete information than the other. Additionally, each bureau uses slightly different scoring algorithms, which can produce different scores even from identical data. Both scores are valid — lenders decide which bureau (or bureaus) they prefer to use.

Who Can Access Your Credit File

Your credit file is not public, but it can be accessed by parties with a permissible purpose:

• Lenders assessing credit applications (hard inquiry)
• Landlords checking rental applicants
• Employers in certain industries (soft inquiry, requires your consent)
• Yourself — always a soft inquiry, never affects your score
• Existing creditors reviewing your account (soft inquiry)