Why Your Equifax Credit Score Is Lower Than TransUnion

Why Your Equifax Credit Score Is Lower Than TransUnion

Your credit score allows you to get credit, buy large ticket items, rent an apartment, get certain jobs, and is viewed as a window into your financial trustworthiness. The higher your credit score, the better the loan terms.  But just what is your credit score and who is behind it? And why are your scores different from each reporting agency?

Who are the Credit Bureaus?

There are three different commonly used credit bureaus; Transunion, Equifax, and Experian. Each one collects financial data from creditors. They then analyze this data and issue credit reports to anyone who has permission to obtain the report – potential employers, lenders, landlords, etc.

Each one collects slightly different data and since creditors are not required to report your data, each one may have slightly different information. For instance, Transunion includes extensive data on your employment while Equifax and Experian report only your employer’s name. In addition, each one uses a unique algorithm.

There are also “niche” credit bureaus. If someone wants to check your credit, ask which company they intend to use. You can then request a report from that company to verify all your information is correct.


FICO vs VantageScore

Your credit report will use one of two scores – FICO or Vantagescore. FICO is the most common one. It stands for Fair Isaac Corporation. Each credit bureau creates a FICO score based on what is reported to them. This may account for a difference in FICO scores among credit bureaus. One problem with FICO is that every time someone does a “hard pull” of your credit report, your credit score drops temporarily.

VantageScore is an algorithm developed by the credit bureaus based on the consumer credit information on file. It assigns different weights to different parts of a credit profile. Initially, the VantageScore used its own score ranges, but now uses the same scoring as FICO. VantageScore is especially helpful for people with a thin credit history or who are just starting out.

Regardless of which scoring systems is used, the credit score chart is as follows:

  • Excellent = 750 and above
  • Good = 700-749
  • Fair = 650-699
  • Poor = 550-649
  • Bad = Below 550

Equifax Vs Experian Vs Transunion

You are entitled to a free copy of your credit reports once a year. You can view these for free through AnnualCreditReport.com.

Equifax

  • charges for reports ordered through website
  • dispute button on website
  • paid credit monitoring subscription called Equifax Complete™
  • will notify the other credit bureau if you notify them of a fraud
  • credit freeze available, but must notify all three yourself
  • Equifax credit score – 300 – 850

Experian

  • charges for reports ordered through website
  • dispute button on website
  • paid credit monitoring subscription called Experian Credit Tracker℠
  • will notify the other credit bureau if you notify them of a fraud
  • credit freeze available, but must notify all three yourself
  • Experian credit score – 300 – 850

TransUnion

  • charges for reports ordered through website
  • dispute button on website
  • paid credit monitoring subscription through TransUnion credit monitoring service
  • will notify the other credit bureau if you notify them of a fraud
  • credit freeze available, but must notify all three yourself
  • TransUnion credit score – 300 – 850

What is the Difference between TransUnion and Equifax and Experian?

There is no difference between the three credit bureaus. They will have different scores because of what is voluntarily reported to them. So why do they have different scores? Equifax, Experian and Transunion use different algorithms, there is different information reported to each company, and TransUnion places more weight on your employment history.

How Do I Know If My Credit Report Is Correct?

You should check your credit report once a year. It is free and simple. You can purchase a report from each credit bureau or go to AnnualCreditReport.com. You can also look into websites like Creditsesame or CreditKarma.

When you get your report, look for any errors. Is your name correct? Address? Employer? Next, examine the open lines of credit. Did you actually open them? Are there loans or credit cards you don’t recognize? Some issues, like bankruptcy, are supposed to drop off your report after 10 years. Debt sent to collections should drop off your report after 7 years. However, if you have a judgement, the time limit is determined by your state’s statutes of limitation.

If you discover errors, you should dispute them. Send COPIES of documentation to the credit bureau along with explanations. You may have to do it several times and stay on top of them.

If you are denied credit based on your credit report, you can request the reason and a report. Some experts suggest spreading out requests for credit reports so that you get a different one every four months (for instance, TransUnion in January, Experian in May, and Equifax in September). This will allow you to look for fraud or other issues before too many months have passed.

If someone has stolen your identity, you can contact each credit bureau individually and place a freeze on your credit until you get the issue solved.

How Can I Improve My Credit Score?

If you are not happy with your credit score, you can start to fix it immediately. First, work on paying bills on time. Since 35% of your score is based on timely payments, it can be a pretty quick way to improve your score.

Next, use your credit carefully. Credit utilization accounts for 30% of your score. Credit utilization is the ratio of outstanding credit card balance versus your credit limit. The lower your utilization ratio, the better. For instance, if you have $1000 limit and $900 of outstanding balance, your credit utilization is 90%. Pay down your credit card bills. You can also ask for increased credit limits. Just don’t use the increased limits!

Credit age makes up 15% of your score. Basically, the longer you have had credit reported to the bureaus, the better. Having old credit – cards held for a long time – is also helpful. Lenders also like to see a variety of credit types. Credit variety accounts for 10% of your score. And finally, the number of recent inquiries count for 10% of your score. This means you do not want to apply for credit cards just to decrease your purchase costs. Every single time you do that, your credit takes a temporarily hit.  

Click here to learn how many credit cards you should have.

Our Take

Your credit report is very important to your future. Whether you are buying a house or car, looking for a new job, or wanting to start on your education, your credit score matters. There isn’t much difference among the three bureaus – Equifax, Experian or TransUnion – but each needs to be monitored for accuracy.

Pacific Debt has helped thousands of people reduce their credit card debt.


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