Every credit agency performs the same function. With publicly available information and reports sent from lenders, they make a credit profile and calculate your rating so potential creditors can determine your creditworthiness whenever you apply for a loan or line of credit.
You have probably already heard of Equifax, Experian, and TransUnion, the three major consumer credit agencies. But according to Credit Karma, there are almost 50 credit agencies on the Consumer Financial Protection Bureau’s 2020 List of Consumer Reporting Companies.
Although every agency generates an individual report for each consumer, no one company has more weight over the others. So then, if each credit bureau works similarly and their report are equally important, what’s the difference between any of these companies?
To find the answer, Credit Karma examined TransUnion and Equifax to find out what differences — if any — there are in the many credit agencies currently available.
Why Do TransUnion And Equifax Have Different Credit Scores?
When you check your credit report from TransUnion and Equifax, you might notice some small differences between each one. In some cases, these variations could be dramatic.
Several factors might explain why you have a different score from each bureau.
- Credit scoring models can vary and generate their own scores. Every credit bureau uses a proprietary scoring model, and TransUnion and Equifax are no different. Although your rating depends on similar or identical factors (e.g., your payment history or credit utilization ratio), each model gives these variables a distinct weight.
- Each credit agency might have different information. Your records aren’t issued to every credit bureau. So while one lender might report your activity to the three major agencies, another might only use one or two, while some don’t send anything. Lenders also update each agency at various times. All of this means that your score can vary from one agency to the next.
- You might be viewing an older score. Your credit score is a reflection of your credit profile at a specified moment. Because scores can fluctuate monthly, weekly, or even daily, you should compare ratings from similar time frames when assessing multiple credit agencies’ reports.
Is TransUnion Or Equifax More Precise?
No one credit bureau offers a more accurate credit score over the others. There’s a possibility that lenders may prefer one agency over another when they perform credit inquiries, but that doesn’t mean your score from that particular company is more important.
Which Credit Report Do Lenders Check?
It’s hard to say which credit bureau lenders use to check your history and your score. The easiest way is to ask, but creditors aren’t required to provide an answer. However, if a lender rejects your application for a line of credit, they are compelled by law to…
- Give you the reason for their decision.
- Tell you which credit score they used to make their decision.
- Provide the name, address, and phone number of the credit bureau whose report they used.
- Tell you your right to a free report from the bureau within 60 days after rejecting your application.
- Explain how to resolve errors on your account or add more information to it.
The credit bureau that reported your score must give you a copy of the record the lender used to determine your creditworthiness. When you receive it, check for any mistakes and file a dispute to clear it from your profile. By law, the bureaus must review and fix any errors.
How To Check Your Credit Scores With TransUnion And Equifax
Your credit history plays a large part in your creditworthiness. When you have healthy credit, you have a higher chance of approval and favorable terms. This makes borrowing more affordable than having bad credit. Because your credit continuously varies, it would be best to monitor your account routinely, so you always know where you stand.
From now until April 2021, you can check your credit report from the three major credit agencies once a week for free by visiting AnnualCreditReport.com. You can also get a complimentary report from smaller agencies at specific times.
Regularly review your credit accounts from Equifax, Experian, and TransUnion makes it easier to find ways to boost your score and your chances of receiving approval for a line of credit. Additionally, it can ensure peace of mind since you might catch potential fraudulent activity sooner rather than later. Lastly, checking your credit history lets you know that your account is accurate and allows you to correct any mistakes that might impact your score.
- Pimplaskar, Evelyn. “TransUnion vs. Equifax: What’s the Difference?” Credit Karma, 19 Nov. 2020, www.creditkarma.com/advice/i/transunion-vs-equifax.