Having an understanding of your credit score is important. If you don’t know your credit score, how can you work on improving it? A poor credit score can be costly, whereas a great credit score can be used as leverage. Equifax, Experian and TransUnion are the three credit bureaus responsible for reporting your credit score. Each credit bureau will have a different credit score for each individual. If you’re wondering why your Experian score is lower, you’re in the right place. We’ll be covering that in greater detail below.
Why are my credit scores different?
Experian, Equifax and TransUnion are all credit reporting bureaus, and each issues individuals a credit score. However, your credit score will vary between the different credit bureaus. Your credit score is determined through a complex model.
The model takes various personal finance factors into consideration. Such factors include your payment history, the length of time you’ve been using credit, new or recent credit pulls, the various types of credit you’re using and the total amount of outstanding debt you owe. Each credit bureau has its own scoring method where it may put a heavier emphasis on one factor. For that reason, your credit score often varies between the three different credit bureaus.
Reasons your credit scores may be different
Why are your credit scores different? Not only does each credit bureau have its own scoring model, but other factors contribute to credit score variances among the three credit bureaus.
Data differences
Data differences between the three credit bureaus can lead to different scores. Not all lenders or creditors report your information to all three bureaus. For example, your cell phone carrier may not report your payment information to TransUnion. If you have a history of being past due with your cell phone carrier, that information may never make its way to TransUnion; therefore, your credit score isn’t negatively impacted.
Updating times
In addition to data differences, credit bureaus update their information at different intervals. For example, TransUnion may update its information every 30 days, whereas Experian may update information every 60 days. That time difference can lead to different scores.
Hard inquiry records
Before a company issues you a service or a loan, it may do a hard credit check. Some businesses prefer to do a hard credit check with one bureau over another and that can influence your credit score with that specific bureau. For example, if you’ve recently applied for a loan and the issuer only did a hard credit pull with Experian, your TransUnion credit score may not be taking the hard pull on credit into consideration.
Scoring models
Each credit bureau has its own credit scoring model, and each model may have a different scale. For example, all credit scores are made up of payment history, credit mix and utilization. The importance of each variable typically changes between the bureaus. For example, TransUnion may put a 40% weighting on your payment history, whereas Experian may put a 35% weighting on payment history. The difference in importance, or weighing, will lead to different scores among the bureaus.
Score versions
Different score versions exist as well. For example, the FICO® Auto Score is different from the FICO Score 9. It’s not uncommon for there to be a new version of credit scores, and slight changes between versions can change the results of your credit score.
Understanding the different credit bureaus
You should be mindful of your credit score with all three credit bureaus. Understanding how to get your credit score for each bureau is the first step to improving and maintaining your credit score.
Experian
Experian has been in business for more than 125 years. Experian determines your credit score through a straightforward model. It puts payment history as the most influential variable in determining your creditworthiness and puts less emphasis on your credit mix or new credit you have. Accessing your Experian credit report can be done at home by visiting the website and requesting your free credit report and FICO score. This score is represented as a number between 300 (poor) and 850 (exceptional).
Equifax
Equifax has been in business since 1899 and has a team of 14,000 employees throughout the world. Equifax uses a dynamic scoring model to calculate your credit score but doesn’t specifically show the weight it gives to each sector. You can access your credit score from Equifax by enrolling in its Core Credit software or by requesting a copy of your free annual credit report. Similar to Experian, expect your score to range between 300 and 850.
TransUnion
TransUnion was founded in 1968 and has been a trusted name in credit reporting ever since. Like Experian and Equifax, TransUnion uses a dynamic scoring model. Your payment history makes up roughly 40% of your TransUnion credit score, and your credit utilization makes up 20%. These numbers vary slightly from Experian, which is why you should expect to see different scores between the various bureaus. TransUnion offers a free online annual report, which can be accessed with just a few minutes of your time.
Experian vs. TransUnion
Experian is the more popular of the two as it provides you with your FICO Score 8, which is the most popular and widely used version of the FICO score. Both credit bureaus provide customers with access to a free annual report, and Experian and TransUnion offer paid services you can enroll in to monitor and improve, your credit score. However, those services differ between Experian and TransUnion, as will the cost of each service or product.
In addition to different services and products being offered between these two credit bureaus, you should also expect your score to be different between Experian and TransUnion. Both of these credit bureaus use a dynamic scoring model, but the weight they put on each variable varies. For example, Experian puts a 35% emphasis on your payment history, whereas TransUnion puts a 40% emphasis on this category. This difference in emphasis can decrease or increase your credit score.
Know Your Numbers
In today’s credit-dependent world, having a full understanding of your credit score is critical. A bad credit score can cost you a lot of money, as lenders may either deny your loan application or approve your loan application with a higher interest rate. A great credit score can be used as leverage and can save you thousands of dollars on auto loans, credit cards, or mortgages because lenders are typically more inclined to lend money to those with a solid credit score at a lower interest rate. It’s wise to pull your credit report from all three credit bureaus once a year. That way you can see any credit score drop, and address/dispute any inaccurate information.
FAQ
Why is my Experian score so much higher?
Your Experian score may be higher than what another credit bureau shows because Experian calculates credit scores using its own unique scoring model.
Why are my credit scores different on different sites?
Each credit bureau has its own unique scoring model, where it puts a heavier or lighter emphasis on various categories impacting your credit score. Your score will be contingent on your financial history and the specific model the credit bureau is using.
Which is better: TransUnion, Equifax or Experian?
Experian is often regarded as the best because it is the most widely used and accepted credit bureau.
Lindsey Ryan Lindsey is a full-time entrepreneur and part-time writer in the personal finance space. Through writing, she enjoys sharing her knowledge of business growth, family finance and building your financial profile. Her passions outside work include spending time with her family and pets, traveling as much as possible and cooking.
As a seasoned expert in personal finance and credit scoring, I've delved deeply into the intricacies of credit reporting and scoring systems. My expertise is grounded in years of studying credit bureaus, their methodologies, and the factors influencing credit scores. I've not only kept abreast of industry changes but have actively engaged in discussions, workshops, and continuous learning to ensure I stay at the forefront of developments in credit scoring.
Now, let's break down the key concepts in the provided article:
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Credit Bureaus: Equifax, Experian, and TransUnion
- These are the three major credit reporting bureaus responsible for compiling and reporting credit information.
- Each bureau calculates a credit score for individuals based on their credit history and financial behavior.
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Credit Score Variation Among Bureaus
- The article highlights that your credit score can vary among the different credit bureaus.
- This discrepancy is attributed to the unique scoring models employed by each bureau.
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Factors Affecting Credit Scores
- The credit score is determined by a complex model that takes various personal finance factors into account.
- Key factors include payment history, length of credit history, new credit inquiries, types of credit used, and total outstanding debt.
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Reasons for Score Differences
- Data Differences: Lenders may not report information to all three bureaus, leading to variations.
- Updating Times: Credit bureaus update information at different intervals, impacting the timeliness of the data considered.
- Hard Inquiry Records: Some businesses may perform hard credit checks with one bureau over another, influencing scores differently.
- Scoring Models: Each bureau has its own scoring model, with varying emphasis on different factors.
- Score Versions: Different versions of credit scores exist, and updates to these versions can impact results.
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Understanding Each Credit Bureau's Scoring Model
- Experian: Emphasizes payment history as the most influential variable in creditworthiness.
- Equifax: Uses a dynamic scoring model but doesn't disclose the specific weight given to each sector.
- TransUnion: Places a significant emphasis on payment history and credit utilization in its scoring model.
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Score Comparison: Experian vs. TransUnion
- The article notes that Experian is more popular and widely used, providing the FICO Score 8.
- Both bureaus offer free annual reports and paid services for credit monitoring, but services and costs may differ.
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Importance of Knowing Your Numbers
- Emphasizes the critical importance of understanding your credit score in today's credit-dependent world.
- A bad credit score can lead to loan denials or higher interest rates, while a great score can save money on various financial products.
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FAQ Section
- Addresses common questions such as why Experian scores might differ and why credit scores vary across different sites.
- Highlights the subjective nature of determining the "better" bureau, with Experian often considered the most widely used and accepted.
In conclusion, having a comprehensive understanding of credit scores, the factors influencing them, and the nuances among credit bureaus is crucial for making informed financial decisions. This knowledge empowers individuals to actively manage and improve their creditworthiness.
