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What is a credit agency?

Credit agencies, also called credit bureaus, collect credit information about individuals which they then provide to banks, finance companies, auto leasing companies, credit card companies and retailers. The two main credit agencies are Equifax Canada Inc and TransUnion of Canada Inc. They have developed a scoring system commonly referred to as the FICO or the Beacon score.

What is a credit report?

A credit report is basically a history showing how consistently (or inconsistently) you pay your financial obligations. It is created when you first borrow money or apply for a credit card. This is why it can be difficult to get a mortgage if you have always paid for everything in cash. There would be no history of how well you manage borrowed money. The financial institutions from which you borrow money regularly send your credit information to credit reporting companies. They keep a record of such things as:

  • when you opened your account

  • if you make your payments on time

  • if you miss payments

  • if you're over your credit limit

  • every credit report request from the past 3 years

The credit reporting agencies retain this information for future reference. This history gives a full record of your financial health and is therefore requested whenever lenders are considering granting you a loan. It helps them determine what kind of financial risk you pose.

Who can access your credit report?

  • Your credit information can be furnished to organizations or individuals considering lending you money.

  • You are protected by provincial and federal law in that only certain individuals may look at your credit report. A company or individual must secure your permission or inform you before requesting your credit report, and they must have a legitimate reason to view your report. A copy of your credit report can only be furnished if the organization or individual requesting it is looking to extend your credit, collect on a debt, rent your housing, employ or insure you.

  • Credit grantors regularly submit credit reports to the credit agencies so that your credit history is current.

  • When you apply for a credit card, the application form includes you also provide written permission to the credit card company to check your credit report initially and throughout the life of the account. Your personal history (i.e. previous address) is required to help locate your credit report.

How a beacon score is calculated

Your credit report contains facts which may then be interpreted according to the individual or organization reviewing them.

Scores range from 300 to 900.

  • The score is comprised of:
  •  35% late payments - One 30 day past-due (R2) drops your score by approx. 40 plts.

  • 30% current level of indebtedness - Being at, near or over your credit limit severely drops your score (approx. 20 pts per account). Being at 80% of the credit limit you will lose points.

  • 15% is the amount of time the credit is opened

  • 10% pursuit of new credit - Each new credit inquiry drops you 7-12 pts. depending on the type of institution.

  • 10% type of credit - More than 3 revolving accounts (i.e. credit cards, line of credit) means you lost approx. 20 pts. per account.

How to calculate your own score

  • Start with 700.

  • If you have more than 3 revolving credit items (i.e. credit card, line of credit), subtract 20 pts. per extra credit item.

  • Subtract 20 pts. for each account that's at 80% or more of its credit limit.

  • Subtract 10 pts. for each credit item that you've applied for during the past 3 months.

  • Subtract 40 pts. for each late or missed payment in the recent past.

How does this affect you?

  • Your credit score has a huge impact on your borrowing power.

  • It helps lenders set their prices. The lower your credit score, the higher the terms and interest rates of the loan. This is known as 'risk based pricing'.

  • Specialty products (i.e. no money down mortgage) have a minimum Beacon Score requirement. 

How to improve your score

  • Limit your credit inquiries to 3 per year.

  • Keep your revolving balances under 80% of their limit.

  • Pay bills on time.

  • If moving, provide your change of address to lenders.

  • When shopping for a car, house or any other product that will require a credit check, only have one credit check done. Don't allow all the financial institutions that you are shopping with to do a credit check every time. You only need one to determine if you have credit that is acceptable. If you find out you have a problem with your credit then you can work towards correcting it . If you don't have a problem with your credit then once you make the decision of which financial institution you are using you can then have the final credit check done. This way you will not damage your credit any more than necessary.

Contact Information 


  • National consumer relations for consumers who have been denied a benefit or wish a copy of their file: 1-800-465-7166.


TransUnion of Canada Inc: