TransUnion® Vs. Equifax®: Which Score Matters More? Show
Looks can be deceiving when it comes to your credit score. If you’re worried you may have a low credit score, it may depend on which credit reporting agency you’re referencing. Two of the biggest credit bureaus are TransUnion® and Equifax®, and while they both collect and store your credit information, they do so in slightly different ways. This article will take you through the processes that TransUnion and Equifax use to calculate your credit score, and explain why you may see different results between the two credit bureaus. What’s The Difference Between TransUnion And Equifax?
As mentioned above, TransUnion and Equifax are part of the “big three” credit reporting agencies – Experian® being the third. Ultimately they offer the same service, which is to collect and provide consumers’ credit information using personal information and public records. This includes generating a credit score that you can use to showcase your creditworthiness to potential lenders. How this service is offered is where TransUnion and Equifax differ. Let’s take a look at some of the features each agency offers. TransUnionTransUnion was founded in 1968 and is based in Chicago, Illinois. It offers a consumer credit monitoring plan at the cost of $24.95 per month that includes the following services:
EquifaxEquifax, founded in 1899 and currently headquartered in Atlanta, Georgia, offers three main plans for its members.
TransUnion Vs. Equifax: Calculating Your Credit Score
The two agencies also differ in how they calculate your credit score. Credit Score RangesTransUnion uses the VantageScore® model when calculating your credit score, based on a range of 300 – 850. A “good” score may rest in the 661 – 720 range. Equifax, meanwhile, uses its own scoring model with a range of 280 – 850, with “good” being 670 – 739 and higher. Their algorithm closely resembles the FICO® model. How They Calculate Your ScoreTransUnion and Equifax can pull your credit information from similar sources. Creditors are an important source of information for these agencies. These include credit card issuers, banks and lenders who may have lent you money in the past. These institutions report information on their borrowers to credit reporting agencies like TransUnion and Equifax. Credit bureaus can also access your information from public records, like reports of bankruptcy or tax liens. What Factors Affect Your Credit Score?How your credit score comes out may be affected by the following factors:
TransUnion Vs. Equifax: Why Your Scores May Differ
The main reason your TransUnion and Equifax scores may look different from one another is that the companies use different algorithms to compute your score. Credit bureaus can only work off of the information they receive, and in some cases, creditors may not report the same data to each agency, or may only report to one or two of them. On the other hand, some credit bureaus may collect information that the others don’t. For example, Equifax is known to report longer credit histories for borrowers than TransUnion or Experian. Additionally, TransUnion may report your employment history and personal information to determine your creditworthiness, while Equifax and Experian may only report the name of your employer. Which Score Is More Accurate?Neither score is more or less accurate than the other; they’re only being calculated from slightly differing sources. Your Equifax credit score is more likely to appear lower than your TransUnion one because of the reporting differences, but a “fair” score from TransUnion is typically “fair” across the board. What To Do If Your Credit Scores Are DifferentThere is little you can do, besides building your credit up, to affect the outcome of your score if it’s different between bureaus, but if you think there are errors in your credit report, you can file a dispute with whichever bureau you believe made the mistake. TransUnion Vs. Equifax: Why Your Scores May Differ
The main reason your TransUnion and Equifax scores may look different from one another is that the companies use different algorithms to compute your score. Credit bureaus can only work off of the information they receive, and in some cases, creditors may not report the same data to each agency, or may only report to one or two of them. On the other hand, some credit bureaus may collect information that the others don’t. For example, Equifax is known to report longer credit histories for borrowers than TransUnion or Experian. Additionally, TransUnion may report your employment history and personal information to determine your creditworthiness, while Equifax and Experian may only report the name of your employer. Which Score Is More Accurate?Neither score is more or less accurate than the other; they’re only being calculated from slightly differing sources. Your Equifax credit score is more likely to appear lower than your TransUnion one because of the reporting differences, but a “fair” score from TransUnion is typically “fair” across the board. What To Do If Your Credit Scores Are DifferentThere is little you can do, besides building your credit up, to affect the outcome of your score if it’s different between bureaus, but if you think there are errors in your credit report, you can file a dispute with whichever bureau you believe made the mistake. TransUnion Vs. Equifax: Which Score Is More Important?While no credit score is necessarily better or more accurate than the other, it can make a difference when you’re trying to get a mortgage, auto loan or personal loan.Lenders typically use your FICO® Score to gauge your creditworthiness, and since Equifax’s algorithm more closely resembles the FICO® model, your Equifax score may better reflect whether you’ll qualify for the loan you want.Your Equifax score won’t be a tell-all, though. Lenders may look at your scores from all three credit bureaus and take the median score for the qualification process. If they only look at two of the three bureaus, they’ll likely take the lower of the two scores.If you’re co-borrowing a loan, lenders will take the lowest median of the two parties.Since different algorithms are used across the different credit bureaus, an “excellent” score may appear “good” on another scale. If you’re applying for a personal loan wanting good rates and terms, you should make sure your lowest of your three scores can qualify you for that loan.A good credit score for a personal loan would be 650 or higher if you’re looking for favorable rates and terms. Final Thoughts
It may seem confusing to keep track of your credit scores across three different credit bureaus, but know that having varying scores isn’t necessarily a cause to worry. Credit scores from TransUnion and Equifax may only appear different because of the different ways they’re calculated. Errors can always be disputed with the bureaus themselves, but you can really only control the factors that affect how your score comes out. A good or excellent credit score can net you favorable rates and terms for the loan you want. See what personal loan rates you may qualify for by getting prequalified with Rocket Loans®. Should I use Experian Equifax or TransUnion?If you simply want more control over your credit report and credit score, Experian offers the most bang for your buck in terms of personal credit monitoring and identity protection. However, TransUnion offers the most business-related products.
Which credit score matters more TransUnion or Equifax or Experian?Although Experian is the largest credit bureau in the U.S., TransUnion and Equifax are widely considered to be just as accurate and important. When it comes to credit scores, however, there is a clear winner: FICO® Score is used in 90% of lending decisions.
Which is more accurate Experian or Equifax?2 Experian has a slight edge over Equifax because it tends to track recent credit searches more thoroughly. Experian breaks down a credit report into sections, which include the following: Personal information including past addresses. Employment.
Why is my TransUnion and Equifax higher than Experian?Your score differs based on the information provided to each bureau, explained more next. Information provided to the credit bureaus: The credit bureaus may not receive all of the same information about your credit accounts. Surprisingly, lenders aren't required to report to all or any of the three bureaus.
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