The Giants of Credit! Equifax and TransUnion

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Side by Side Image of Equifax and Transunion. Hero Image

Written by :                                                                                                                   

Pedro Anatoyas

July 7,  2020

Ever wonder where your credit score comes from?

Some of you may be new to the concept. Yes, there is a compiled credit file constructed just for you. This file, otherwise known as your credit report, can very easily allow you to have access to:

  • Mortgages
  • Student and Auto Loans
  • Credit Cards 
  • Lines of credit 

It can also deny you these things. That’s why this article was written. To clear the air on what your credit score; but more importantly who it is that gets a say in what is added to it and what is not.

First, let’s start with a little history lesson…

Fair Issacs Corporation: A Historical Summary

Before Equifax and Trans Union…

In the beginning, it started when two friends who met at Stanford University Research Institute decided that it was time to leave their current position and begin their enterprise in the world of credit scoring.

Their goal was to build the world’s first computerized system that could assess potential credit applicants with accuracy using factual assessment in a non-discriminatory manner.

So they relocated to San Rafael California and set up shop in a tiny apartment. It was here that they first conceptualized their visionary ideas for credit analysis created for what would eventually evolve into the Fair Isaac Corporation or more commonly known as FICO.

Between the two of them, Bill Fair and Earl Isaac managed to scrounge together $800 and a loaner computer that would eventually allow them to build a digitized system of algorithms that could accurately produce a credit score of any individual.

Through years of research and determination, they were able to see their dreams come to fruition. They struck a deal with Wells Fargo in 1972 and slowly worked their way up the chain of banks to develop the world’s most comprehensive and unbiased method of credit approval.

Simultaneously Check Your Credit Scores and Protect Your Identity

Today, FICO offers detailed credit analysis not only for banks and lenders but for consumers and credit applicants as well.

With the development of the myFICO online portal, accessing your detailed credit report is a snap. Any US citizen can register online and choose from one of three monthly service plans starting at $19.95 per month.

 

With any of these plans, you can get access to features such as your full FICO credit report with score, identity theft insurance, identity monitoring and 24×7 identity restoration. Reports will update between every (1) month to every (3) three months – depending on which subscription plan you choose.

Unfortunately, unless you reside south of the border, your access to myFICO and its pricing plans are prohibited.

So as Canadians, what are the options?

The Age of Credit Bureaus: Two to Rule Them All.

In Canada, there are two credit bureau’s that maintain consumer credit files and are available upon request. 

1. Equifax Canada

Equifax was established just over 120 years ago, by two Brothers from Atlanta, Cater and Guy Woolford.

Cater got his start as a grocer in Chattanooga, Tennessee, where he assisted in compiling a handwritten directory of customers that were deemed high-risk or low-risk. This list benefitted his grocer client so much that he decided to share his diary of names and corresponding liabilities to neighbouring merchants for a small fee.

To his surprise, this Merchants Guide as he colloquially named it, showed so much promise existing as its own entity, that he decided to ask his brother (a lawyer of six years), to tag along and develop this newfound enterprise.

Historically known as the Retail Credit Company (changing their name in 1979 to its current title), Equifax, over the next century, would expand its reach across the United States upwards into the Great White North and eventually spreading overseas through Europe and South America by the mid ’90s.

Today they offer online consumer services such as credit reports, risk management analytics, demographics and identity theft protection.

Equifax Canada is a branch of the bureau’s main credit division allowing Canadians the opportunity to view as well as correct any visible errors in their credit report. It also allows one the opportunity to gain perspective with how they compare to the rest of the nation and if their score meets the minimum standards for a swift and breezy application approval.

Equifax Headquarters With Canadian Flag blended into image, with outdoor botanical gardens and indoor blended office and atmosphere
If you are considering applying for a mortgage, credit card or any other type of loan in the near future, it is imperative that you plan ahead to secure the very best possible rate. Having access to your credit file and its details allows you the opportunity to make any necessary adjustments that might improve your credit and optimize your ratios, well in advance of any new applications.

2. TransUnion

TransUnion was formed in 1968 to act as a holding company for the Union Tank Car Co. but soon developed into a distinctly independent enterprise by reinvesting it’s revenues into the acquisition of credit information files, after noticing the huge potential of income generated by other established credit bureaus at the time.

With the purchase of the Credit Bureau of Cook County in 1968, TransUnion instantly found itself in possession of approximately 3.5 million credit accounts. They were able to build new working relationships with hundreds of lenders and eventually leverage data and provide risk management tools to their new clientele.

Over the next 40 years, Transunion would build a reputation of aggregating reputable borrowers by building a reliable database through the advancements in computer hardware and proprietary software. Their capability to process millions of consumer credit files was light-years from the unreliable and largely anecdotal methods of unregulated credit bureaus from the days of old.

Near the tail end of the 80s, they set up shop in Toronto determined to grow internationally and overseas into the United Kingdom and beyond. Then, with the recently passed US Congress bill, mandating strict regulations with respect to credit collections and usage, consumers were given the right to access their own files and dispute any discrepancies. This bill became known as the Fair Credit Reporting Act or FCRA for short.

This proposal was undoubtedly a key player for giving rise to the development of subscription-based online accessibility. Every American now had rights to examine their personal credit file. Included in this document would be a three-digit credit score, of course, as well as historical reports (of all credit cards, loans and select utilities), past collections (or accounts that have gone into default) and any hard credit inquiries.

About 10 years later this would lead Canadian legislature to drop their own version of this bill regulating credit collections and personal privacy in the form of PIPEDA (which is short for Personal Information Protection and Electronic Documents Act of 2000). Yup, that sure is a mouthful.

In 2014, TransUnion developed an innovative new program designed to help non-homeowners improve their scores through voluntary reporting by property owners of their rental units. This initiative labelled ResidentCredit, allowed landlords to report details to credit bureaus regarding relevant particulars about their tenant’s transactions or lack thereof.

Similar to Equifax, TransUnion offers you direct access to your credit file complete with historical views of all open and closed files on record as well as email alerts for possible identity theft breaches.

Online access to your credit score is just a click away. With their visually appealing dashboard, you can see your score and how it compares to the rest of the nation. In addition, it’s a breeze to view your recent payments and your membership order all within one well-designed portal.

Is There a Charge to Obtain my Credit Report?

Accessing your credit report online through Equifax or Trans Union is a very simple process and provides you with a credit report almost instantaneously. However, there is a small fee for this service.

Currently, both Equifax and TransUnion charge a $19.95 subscription fee per month. You can cancel at any time with no commitment. As of recently, TransUnion is offering a promotion of $4.95 for the first month and $19.95 thereafter.

Can I Receive My Credit Report For Free?

As an alternative, both credit bureaus do offer a free credit report for those unable or unwilling to provide the necessary funds for online access. Mandated by parliament legislature, any credit bureaus within Canada (currently there are only two of course) have to provide at least one credit report in any 12-month timeframe, free of charge to anyone if requested.

You can request your free report by phone, fax or postal mail and takes between 5-10 business days to arrive through the Canada Post. You will most likely have to provide proof of identity with 2 forms of identification by mail or fax to receive your free report using this method. More details are on their website.

Is There a Way to Get a Free Report Without Waiting

There certainly is!

Two companies emerged with one goal in mind. To offer a more feasible way to tackle bad credit by offering free credit reports and scores. Taking into account a consumer’s profile, they would be paired up with product offers that would appropriately suit their financial status.

Signing up for any one of these offers is not compulsory to gain access to your credit files, however, they hope you might consider one of these products, as they might benefit you in your present financial state of affairs.

Borrowell is a Proudly Canadian Financial Technology Company

Co-Founded in 2014 by Andrew Graham and Eva Wong, Borrowell was launched as the first-ever fintech company to offer free credit reports within Canada.

Striking a deal with Equifax Canada, they partnered up to provide a consumer report complete with historical records dating back to the user’s first opened account. Borrowell applies Equifax’s risk assessment engine allowing consumers free access to their credit file.

As of April 2019, Borrowell has helped over one million Canadians with their finances through credit reporting services.

Credit Karma Arrives is Canada

Founded by CEO Kenneth Lin and childhood friend Greg Lull, U.S based Credit Karma was founded with a single goal in mind. “To level the playing field for consumers by providing them with credit information so they can make better informed financial decisions“

Shortly thereafter they brought in key team members, Los Angeles native Nichole Mustard as acting Chief Revenue Officer as well as their coding guru and Chief Technology Officer, Ryan Graciano an acquaintance of Greg’s.

Over the next 10 years Credit Karma would grow to become the most valuable privately funded, personal financial company worldwide, offering innovative smartphone features like direct dispute: An in-app tool allowing registered members the ability to report discrepancies
regarding personal file details, especially ones that are fraudulent in nature.

In 2016, expansion extended north across the border, offering Canadians the opportunity to take advantage of the credit reporting services already used by over 1 billion customers in the US.

According to Sensor Tower (a data-driven aggregation and insights database), the Credit Karma app has been downloaded from the iOS app store approximately 500,000 times worldwide, as of June 2020. You can access Credit Karma’s services and database through your choice of the desktop version or mobile app.

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