Has a creditor ever denied you a loan and you didn’t understand why? While it could be a wide array of reasons, two critical factors lenders evaluate are your credit score and credit report. These tools provide insights into your financial behaviour and reliability and help creditors determine your creditworthiness. The question is, why do they matter so much? Well, knowing what they mean and how they differ can empower you to make better financial decisions and address potential issues that may affect your creditworthiness. To help you understand, our in depth guide on credit score vs credit report explores the key distinctions, how to access both in Canada, and actionable steps to improve them.
What Is a Credit Report?
A credit report is a comprehensive document that records your credit history and activity over time. It is maintained by Canada’s two primary credit bureaus: Equifax Canada and TransUnion Canada. These organizations collect data from lenders, utility companies, and public records to compile a detailed profile of your financial behaviour. The information in a credit report includes personal details such as your name, address, Social Insurance Number (SIN), and employment history. More importantly, it tracks your credit accounts like loans, mortgages, and credit cards, along with your payment history for each account.
Your credit report also lists inquiries made by lenders or other entities that have checked your credit for various purposes. These are categorized as either “hard inquiries,” which can impact your credit score, or “soft inquiries,” which do not. Additionally, public records such as bankruptcies or consumer proposals are included in the report. It is important to note that while both Equifax and TransUnion maintain similar reports, there may be slight differences because not all creditors report to both bureaus.
Where to Get Your Credit Report in Canada
In Canada, you can access your credit report for free once a year from Equifax or TransUnion. You can request it online through their websites or by mail with proper identification documents. Reviewing your credit report regularly is crucial for identifying errors or fraudulent activity that could negatively impact your financial standing.
What Is a Credit Score?
A credit score is a three-digit number ranging from 300 to 900 that summarizes your creditworthiness based on the information in your credit report. Unlike the detailed nature of a credit report, the purpose of a credit score is to provide lenders with a quick assessment of how likely you are to repay borrowed money on time. Higher scores indicate lower risk for lenders and open doors to better loan terms and interest rates for borrowers. From your first credit score, it’s calculated using several factors that reflect your financial behaviour. These include:
- Payment history (35%): One missed payment can drop scores by 100+ points.
- Credit utilization (30%): Using over 30% of your credit limit signals financial stress.
- Credit age (15%): Closing a 10-year-old credit card shortens history, lowering scores.
- Credit mix (10%): Managing both installment loans (mortgages) and revolving credit (cards) demonstrates versatility.
- Recent inquiries (10%): Applying for three credit cards in six months suggests desperation to lenders.
What Is a Good Credit Score in Canada?
In Canada, scores are categorized into four ranges:
Poor (300–579)
Fair (580–669)
Good (670–739)
Excellent (740–900).
The average Canadian has a score around 667, but achieving a score above 700 significantly improves access to premium financial products like low-interest loans or high-limit credit cards. It’s worth noting that different scoring models may yield slightly different results depending on whether Equifax or TransUnion provides the data used for calculation.
Credit Score vs. Credit Report: The Key Differences
Both credit scores and reports are crucial tools used by lenders to evaluate financial reliability. Each serves a distinct purpose and provides unique information about an individual’s credit history. Below are five key differences:
- Format: A credit score is a three-digit number, while a credit report is a detailed document with comprehensive financial data.
- Frequency of Updates: Credit scores can change daily based on activity, whereas credit reports are updated monthly by creditors.
- Access: Credit reports are free annually from Equifax and TransUnion, but credit scores often require payment or are accessed through third-party services.
- Impact on Lending Decisions: A credit score provides a quick risk assessment for lenders, while a credit report offers deeper insights into financial behaviour, such as delinquencies or account history.
- Error Identification: Errors like incorrect account balances or unauthorized inquiries are visible in credit reports but do not appear directly in credit scores.
Why Lenders Check Both
Lenders rely on both tools to make informed decisions. A high credit score may indicate good financial habits, but it doesn’t guarantee approval if the credit report reveals red flags like missed payments or high debt levels. For example, while a score of 600 might suggest low risk, lenders may decline applications if the report shows recent delinquencies or unresolved disputes.
In Canada, financial institutions use this dual approach to assess risk comprehensively. Payday loan providers, for instance, may focus more on recent payment activity in the credit report rather than the overall score when evaluating short-term lending applications.
How to Check Your Credit Score & Report in Canada
Monitoring your credit scores and reports regularly is essential for maintaining good financial health. Errors or fraudulent activity can go unnoticed without regular checks, potentially harming your ability to secure loans or favourable interest rates. Fortunately, Canadians have access to both free and paid options for obtaining this information.
Free & Paid Options for Credit Reports
Canadians are entitled to one free credit report annually from each of the two main bureaus: Equifax Canada and TransUnion Canada. You can request these reports online, by mail, or in person with proper identification documents. Free reports do not include your credit score but provide critical insights into your financial history.
For those who wish to monitor their reports more frequently, paid subscriptions are available through both bureaus. These services often include additional features such as monthly updates and identity theft protection.
Where to Get Your Credit Score for Free
Unlike credit reports, obtaining your credit score versus credit report often involves third-party services or financial institutions. Many Canadian banks now offer free access to scores through online banking platforms. Additionally, services like Credit Karma Canada provide free estimates based on data from Equifax or TransUnion.
It’s important to note that these scores may differ slightly depending on the scoring model used (e.g., FICO® vs VantageScore®). While these tools are helpful for tracking trends over time, lenders may rely on different models when assessing applications.
Common Credit Report & Credit Score Myths
Misconceptions about credit scores and reports can lead to poor financial decisions or unnecessary stress. Let’s debunk some of the most common myths surrounding these tools.
Checking Your Credit Hurts Your Score (Myth vs Reality)
One of the most persistent myths is that checking your own credit harms your score. In reality, this only applies to hard inquiries, which occur when lenders pull your report during an application process. Soft inquiries, such as checking your own score through Credit Karma Canada, have no impact whatsoever.
You Only Have One Credit Score (Myth)
Another misconception is that everyone has a single universal score. In truth, different bureaus and scoring models generate multiple scores based on their unique algorithms and data sets. For example, Equifax and TransUnion may produce slightly different results even when analyzing the same information.
A High Income Means a High Credit Score (Myth)
Income level does not directly influence your score. Instead, factors like payment history and credit utilization play a much larger role in determining your overall rating. High earners with poor repayment habits can still have low scores.
How to Improve Your Credit Report & Score
Improving both your credit score versus credit report requires consistent effort and responsible financial habits over time. No matter how long it takes to improve your credit score, it’s worth it, and here are some tips.
Best Practices for a Healthy Credit Report
To maintain a positive credit report:
- Pay bills on time: Late payments stay on reports for up to six years in Canada.
- Keep balances low: Aim for less than 30% of available limits.
- Avoid opening too many accounts: Multiple hard inquiries can signal risk.
- Review your report annually for errors or outdated information that could harm your standing.
How Long Does Negative Information Stay on Your Credit Report?
So how long does a bad credit stay on your report? Negative marks such as late payments or collections typically remain on Canadian reports for six years from the date of occurrence. Bankruptcies may stay longer—up to seven years with Equifax and ten years with TransUnion depending on provincial regulations.
Get a No-Credit Check Loan With Loan Express Today!
Monitoring your credit scores and reports is essential for building a strong financial foundation in Canada. That said, if your credit history has made accessing loans challenging, Loan Express is here to help. We specialize in offering payday loans and other financial solutions designed for Canadians, regardless of their credit situation. Whether you’re working to rebuild your credit or need immediate financial assistance, get a loan with Loan Express today!
FAQs: Credit Scores vs. Credit Reports in Canada
Can I check my credit score and report for free in Canada?
Yes. Canadians access free credit reports annually via Equifax and TransUnion. Free credit scores are available through banks and Credit Karma Canada.
Do credit scores and reports show the same information?
No. A credit report details your payment history, accounts, and inquiries. A credit score distills this data into a 300–900 number. Scores use algorithms (e.g., FICO®) to predict repayment likelihood, while reports provide raw financial data.
How often should I check my credit report?
Review reports from both bureaus every six months (Equifax in January, TransUnion in July). This staggered approach helps detect errors or fraud faster. The Financial Consumer Agency of Canada recommends annual minimum checks.
Can my credit score differ between Equifax and TransUnion?
Yes. You may see score variations due to differing bureau data and scoring models. Equifax uses FICO®, while TransUnion employs VantageScore® 3.0. Lenders may use either score during applications.
How long does negative information stay on my credit report?
Most negative marks (late payments, collections) remain for 6 years. Bankruptcies stay 7–10 years, depending on the bureau and province. Details vary – consult our guide on bad credit duration.
Will checking my own credit score lower it?
No. Soft inquiries (self-checks) don’t affect scores. Only hard inquiries from lenders during applications cause temporary dips (5–10 points). Monitor freely via free services.