How Credit Files Work: Equifax and TransUnion in Canada

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Understanding Your Credit File in Canada

The credit file is a fundamental tool in the Canadian financial ecosystem. It serves as the record of your financial behaviour and directly influences your ability to obtain a mortgage, auto loan, credit card, or even a cell phone contract. In Canada, two credit reporting agencies compile and maintain these files: Equifax and TransUnion. Every consumer who has used credit has a file with one or both agencies.

Equifax and TransUnion: Two Agencies, Two Files

Equifax and TransUnion operate independently and collect their data separately from creditors. While most major financial institutions report to both agencies, some smaller creditors only report to one. It is therefore possible that your file and credit score may differ slightly between the two agencies. Mortgage lenders in Canada typically consult Equifax, TransUnion, or both, depending on their internal policies. The AMF-certified mortgage broker must check the file from the agency used by the target lender.

Detailed Contents of the Credit File

Personal information: full name, date of birth, current and previous addresses, partial Social Insurance Number (SIN), current and previous employer.
Credit accounts: every open or closed account, including the type (credit card, line of credit, auto loan, mortgage), the limit or original amount, current balance, monthly payment history over 6 to 7 years, and the payment code (R1 to R9 or I1 to I9).
Credit inquiries: the list of all consultations of your file, distinguishing between authorized inquiries (hard pulls, such as a credit application) and informational inquiries (soft pulls, such as employment verification or your own consultation).
Public records: bankruptcies, consumer proposals, court judgments, voluntary deposits, seizures, and liens.
Consumer statements: notes you can add to your file to explain particular circumstances, such as a dispute with a creditor.

Payment Codes Explained

Payment codes are a central element of your credit file. They are divided into two categories: R codes for revolving credit (credit cards, lines of credit) and I codes for instalment credit (auto loans, personal loans, mortgages). Each code is followed by a number from 1 to 9 indicating your payment behaviour. R1 or I1 means you pay within the agreed terms. R2 or I2 indicates a 30 to 59 day delay. The number 9 represents the most negative scenario: a collections account or irrecoverable bad debt.

Credit File Impact on Your Mortgage

During a mortgage application, the AMF-certified broker consults your credit file to assess your creditworthiness. The credit score, a numeric rating generally between 300 and 900, summarizes your file in a single number. Most A lenders (banks, credit unions) require a minimum score of 600 to 680 for the most competitive rates. A score below 600 generally directs borrowers to B lenders or private lenders, with higher rates. The detailed file information is just as important as the score itself: a lender may decline a file despite a good score if it contains recent bankruptcy entries or numerous late payments. The broker must analyze the entire file to direct their client to the lender best suited to their situation.

Frequently Asked Questions

What is the difference between Equifax and TransUnion?

Equifax and TransUnion are the two credit reporting agencies operating in Canada. They collect similar but not always identical information, as not all creditors report to both agencies. Your credit score may therefore vary slightly between agencies. Mortgage lenders generally consult one or both agencies.

What exactly does my credit file contain?

Your file includes personal information, the history of all your credit accounts with payment codes (R1 means payment on time, R9 means account in collections), the list of credit inquiries, public records (bankruptcy, consumer proposal, judgments), and any statements you have added.

How can I obtain my credit file for free?

Every consumer has the right to obtain a free copy of their credit file by mail from Equifax and TransUnion, at least once a year. Both agencies also offer online portals for instant access, sometimes charging fees for versions with numeric scores or monitoring services.

What do the payment codes R1, R2, R9 mean?

The R (revolving) and I (instalment) codes range from 1 to 9. R1/I1 means payments are made on time. R2/I2 indicates a 30 to 59 day delay. Numbers increase with the severity of the delay. R9 indicates a collections account or bad debt, while R7 indicates a consumer proposal.

Does my mortgage broker see the same thing I do in my file?

The AMF-certified mortgage broker who pulls your file sees the same information as you, plus the numeric credit score. They also receive a detailed report including payment trends. The broker's inquiry is recorded as an authorized inquiry (hard pull) on your file.

How long does information stay on the file?

In Quebec, negative information generally remains for 6 years from the date of the last late payment. A first-time bankruptcy stays for 6 years after discharge. A consumer proposal stays for 3 years after completion. Credit inquiries remain for 3 years.