Understanding the Differences Between Credit Reporting Agencies
When it comes to your credit score, you might be surprised to learn that there are actually three major credit reporting agencies (CRAs): Equifax, Experian, and TransUnion. Each CRA collects and maintains your credit information, and they each generate their own version of your credit score. This can lead to some confusion, as your scores from each agency may not be exactly the same.
So, which credit reporting agency usually has the lowest score? The answer is: it depends There is no one-size-fits-all answer to this question, as the differences between your scores can vary depending on several factors, including:
- The specific credit scoring model used: There are several different credit scoring models, and each CRA may use a different model.
- The information that is reported to each CRA: The CRAs may not receive all of the same information about your credit accounts.
- The date that your scores are accessed: Your credit scores can change over time, so the date that you check your scores can also affect the results.
- Errors on your credit report: Errors on your credit report can also affect your credit scores.
Factors that can affect your credit score:
- Payment history: This is the most important factor in your credit score, accounting for 35% of your FICO® Score.
- Amounts owed: This is the second most important factor, accounting for 30% of your FICO® Score.
- Length of credit history: The longer your credit history, the better.
- Credit mix: Having a mix of credit accounts, such as credit cards, installment loans, and mortgages, can help your credit score.
- New credit: Opening new credit accounts can lower your credit score.
How to improve your credit score:
- Pay your bills on time: This is the most important thing you can do to improve your credit score.
- Keep your credit utilization low: This is the amount of credit you are using compared to your credit limit. Aim to keep your credit utilization below 30%.
- Don’t open too many new credit accounts: Opening too many new credit accounts can lower your credit score.
- Become an authorized user on a credit card with good credit history: This can help you build your credit history without having to open a new account.
- Dispute errors on your credit report: Errors on your credit report can lower your credit score.
Checking your credit score:
You can check your credit score for free from each of the three major credit reporting agencies once a year at AnnualCreditReport.com. You can also check your credit score for free from some credit card companies and banks.
There is no one-size-fits-all answer to the question of which credit reporting agency usually has the lowest score. The differences between your scores can vary depending on several factors. However, by understanding the factors that can affect your credit score and taking steps to improve it, you can increase your chances of getting the best possible interest rates on loans and credit cards.
6 reasons why your credit score differs
- Credit scoring model: A variety of models are available to score your credit history. However, FICO or VantageScore are the two primary credit scoring models that are usually used by lenders. Both businesses assess the same primary elements of your credit history, such as your payment history and utilization rate, but they weigh each element differently based on their own formulas.
- Score version: There are numerous credit score variations that are divided into base scores and scores unique to certain industries. Base scores, such as FICO® Score 8 or VantageScore 3. 0, show lenders the likelihood you’ll repay any credit obligation. Industry-specific scores, like the FICO® Auto Score 9, which is used to make auto loan decisions, indicate your likelihood of repaying a particular loan.
- Credit bureau: Information from your credit report, which is obtained from one of the three main credit bureaus (Expperian, Equifax, or TransUnion), is used to calculate credit scores. Your score varies according to the data that each bureau received; this is covered in more detail below.
- Details given to the credit bureaus: Not all of the information about your credit accounts may be given to the credit bureaus. It’s surprising to learn that lenders are not obligated to report to any or all of the three agencies. Even though the majority do, there’s no assurance that the data will be consistent, which could lead to variations in your scores.
- Date scores are accessed: There could be differences if you check your credit score at different times because one of the scores might not be current.
- Errors on your credit report: Any inaccuracies on your credit report may be reflected in your credit score. Your credit score from a report that has errors may differ from one that doesn’t if the errors are limited to one bureau. To protect your credit score, you should dispute any inaccuracies on your credit report as soon as possible.
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Lenders use your credit score, which is a three-digit figure, to decide whether to approve you for financial products like loans and credit cards.
While credit scores normally range from 300 to 850, it can be difficult to determine which version you are being assessed on during the application process because there are numerous variations, from base scores to industry-specific scores.
It can be challenging to determine what credit score range you fall into and which products you have the best chance of qualifying for when you check your score with your credit card company or on a personal finance website only to discover that it differs on another. Additionally, when a lender obtains your credit score, they might do so from Experian, Equifax, or TransUnion, or they might ask for a particular version that differs from the one you checked.
The majority of credit scores include the same elements, including length of credit history, utilization rate, payment history, number of new inquiries, and range of credit products. However, there may be score differences for a variety of reasons, which CNBC Select breaks down below.
Which credit bureau has the highest score? Lowest credit scores? Equifax? TransUnion? Experian?
FAQ
Which credit score is typically the lowest?
Is TransUnion usually the lowest credit score?
Why is my TransUnion score lower than Equifax and Experian?
Is Experian always the lowest score?
Which credit bureau has the lowest FICO score?
The credit bureau that gives the lowest FICO or Vantage score tends to be the one that lenders use the most in your geographic area. Lenders typically slice the pie (between Equifax, Experian, and TransUnion) at the three-digit zip code level.
Which credit bureau has the cheapest prices?
The credit bureau that outputs the lowest score in a specific region sometimes has the cheapest prices. Equifax, Experian, and TransUnion compete fiercely for business from the lenders, and sometimes their customers decide which one to use based on what they charge.
Which company has the best credit report & credit score?
This way, you can always have a rough idea of what your credit report looks like without losing a penny. 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 bureau is best for credit reporting?
Minor credit bureaus including CoreLogic Credco, MicroBilt/PRBC and Innovis may have expertise in reporting particular types of data which can be useful to lenders. The three major credit bureaus work in similar yet slightly different ways from one another.