Finance and Law

How Credit Scores Differ in Canada Vs. the USA

<p style&equals;"text-align&colon; justify&semi;">If you don’t live in the States&comma; looking for financial information online can be tricky&period; Many of the most trusted resources that come up with a typical Google search are written by and for Americans&comma; with advice based on American products&comma; standards&comma; and laws&period; If you aren’t careful&comma; you can get the wrong idea about a lot of different topics&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">One such topic is credit reporting&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;"><a href&equals;"https&colon;&sol;&sol;newsforpublic&period;com&sol;factors-impact-credit-score&sol;">Credit reports and scores<&sol;a> in Canada share enough similarities with American scoring systems that you can easily think they’re identical&period; While both systems serve to judge borrowers on their abilities&comma; there are some key differences that you need to know&period;<&sol;p>&NewLine;<h2 style&equals;"text-align&colon; justify&semi;">Reporting Agencies<&sol;h2>&NewLine;<p style&equals;"text-align&colon; justify&semi;">In the US&comma; the three major reporting agencies are Equifax&comma; Experian&comma; and TransUnion&period; There’s one less in Canada&comma; with just Equifax Canada and TransUnion Canada taking the crown as the major agencies&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">So&comma; here’s the question of the hour&colon; what is your Canadian Credit Report&quest; It’s a detailed list of your past borrowing history that shows your account details&comma; payment histories&comma; and utilization ratio&period; It may include information from personal loans&comma; mortgages&comma; auto financing&comma; and lines of credit&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Equifax Canada and TransUnion Canada may include different information&comma; which may result in each agency generating a different score&period; This happens if a lender shares your account information with just one of the agencies and not the other&period;<&sol;p>&NewLine;<h2 style&equals;"text-align&colon; justify&semi;">Score Ranges<&sol;h2>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Equifax and TransUnion analyze the contents of your report to generate a numerical score&period; Both countries operate on a three-digit scoring system&comma; but the range varies from one nation to the next&period; In Canada&comma; your score may fall between 300 and 900&period; However&comma; the USA shortens this range to 300 and 850&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">In both cases&comma; this score reflects the details contained in your report&comma; generated by the reporting agencies according to their unique scoring algorithms&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Regardless of where you call home&comma; these scores share a similar rule&colon; the higher your number is&comma; the better&period; As your score climbs the scale&comma; you’ll have a greater chance of being approved for loans and lines of credit at better rates and terms&period;<&sol;p>&NewLine;<h2 style&equals;"text-align&colon; justify&semi;">Rating Ranges<&sol;h2>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Knowing your exact three-digit score is important&comma; but understanding how your score rates may be more helpful&period; Since the ranges between countries differ&comma; the categories &lpar;or ratings&rpar; don’t align —as you’ll see below&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">In Canada&comma; ratings fall into the following categories&colon;<&sol;p>&NewLine;<ul style&equals;"text-align&colon; justify&semi;">&NewLine;<li><strong>Excellent&colon;<&sol;strong> 780 and above<&sol;li>&NewLine;<li><strong>Very Good&colon; <&sol;strong>720–779<&sol;li>&NewLine;<li><strong>Good&colon; <&sol;strong>680–719<&sol;li>&NewLine;<li><strong>Average&colon; <&sol;strong>620–679<&sol;li>&NewLine;<li><strong>Poor&colon; <&sol;strong>580–619<&sol;li>&NewLine;<li><strong>Very Poor&colon; <&sol;strong>500–579<&sol;li>&NewLine;<li><strong>Less Than Perfect&colon; <&sol;strong>300–500<&sol;li>&NewLine;<&sol;ul>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Compare this to how the ratings fall in the USA&colon;<&sol;p>&NewLine;<ul style&equals;"text-align&colon; justify&semi;">&NewLine;<li><strong>Excellent&colon; <&sol;strong>800–850<&sol;li>&NewLine;<li><strong>Very Good&colon; <&sol;strong>740–799<&sol;li>&NewLine;<li><strong>Good&colon; <&sol;strong>670–739<&sol;li>&NewLine;<li><strong>Fair&colon; <&sol;strong>580–669<&sol;li>&NewLine;<li><strong>Poor&colon; <&sol;strong>300–579<&sol;li>&NewLine;<&sol;ul>&NewLine;<h2 style&equals;"text-align&colon; justify&semi;">Entry Expiry<&sol;h2>&NewLine;<p style&equals;"text-align&colon; justify&semi;">No credit score is permanent&period; It’s a dynamic number that evolves as you <a href&equals;"https&colon;&sol;&sol;newsforpublic&period;com&sol;pay-off-credit-card-bills-online&sol;">pay bills<&sol;a>&comma; draw against your line of credit&comma; and apply for personal loans&period; Each time your lender shares account data&comma; it becomes an entry in your report that affects your score&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Each entry has an expiry date&comma; after which they will no longer impact your credit&period;<&sol;p>&NewLine;<p style&equals;"text-align&colon; justify&semi;">In Canada&comma; negative info usually stays on your report for six years&period; However&comma; positive history may last for as long as two decades&period; In the States&comma; all entries last just 10 years&period;<&sol;p>&NewLine;<h2 style&equals;"text-align&colon; justify&semi;">Bottom Line<&sol;h2>&NewLine;<p style&equals;"text-align&colon; justify&semi;">Both countries have credit scores that assess the creditworthiness of borrowers&comma; but don’t be fooled — they aren’t identical systems&period;<&sol;p>&NewLine;

Hardik Patel

Hardik Patel is a Digital Marketing Consultant and professional Blogger. He has 16+ years experience in SEO, SMO, SEM, Online reputation management, Affiliated Marketing and Content Marketing.

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