Which Credit Score Matters More: TransUnion or Equifax?
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Summary:
It’s common for your credit scores to differ from one credit bureau to the next. However, as long as they are from one of the three major credit bureaus — TransUnion, Equifax, or Experian — you can assume they are of equal importance. Scores that naturally vary from the different credit bureaus can often be attributed to the way credit reporting agencies calculate credit scores or the information that’s reported to them.
Credit reporting agencies, of which TransUnion and Equifax are two of the biggest, all do pretty much the same thing: they collect information about your credit history from a variety of public and private sources and use that data to generate a credit score for you.
Your credit score is basically a numerical indicator of how well you manage your debts and how much of a credit risk you are. If you’ve looked at a couple of your credit reports and noticed you have different credit scores, you may have wondered: Which credit reporting agency is more accurate, or which credit agency is more important?
Read on to learn more about the similarities and differences between Equifax credit scores and TransUnion credit reports, as well as the criteria they use to generate your credit scores.
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Factors that affect your credit score
First, let’s take a quick look at the factors credit scoring models — and, by extension, credit bureaus — use to determine your credit scores. While different credit scoring models vary and a credit bureau might use a different scoring model than a lender, for example, they all mostly weigh the same factors: payment history, credit usage rate, length of credit history, credit mix, and new credit accounts.
Payment history
No matter the scoring model used, your payment history is the most heavily weighted factor on your credit report (40% of VantageScores and 35% of FICO scores, for example). On-time payments will always boost your score, while if you’re late or miss payments, your credit scores will take a hit. Most lenders report your payment history every month, so it’s crucial to keep on top of your bills.
Credit usage rate
Your credit usage, also known as your credit utilization ratio, is the amount of credit you’re using in relation to your total credit limit. To maintain a good credit score, experts recommend keeping your credit utilization at 30% of your credit limit or less.
Length of credit history
The length of your credit history refers to how long you’ve used credit, from your very first credit card to your newest car loan or mortgage. Lenders like to see that you’ve been using your credit responsibly, so the longer your history of on-time payments, the better your credit score.
Credit mix
Your credit mix refers to the variety of credit accounts you have. Lenders not only want to see that you manage your overall credit responsibly but also that you have experience with different types of lending. An ideal credit mix might include revolving credit (such as credit cards and store cards) and installment loans (such as personal loans, car loans, student loans, and mortgages).
New credit
New credit refers to how often you apply for new loans or credit accounts. While applying for new credit is fine, every time you apply, the credit agencies are notified, which causes your credit score to drop a few points. Too many credit inquiries on your report can be seen as a red flag to lenders.
As David Chami, Managing Partner and Attorney at Consumer Attorneys, explains, “The more recent the inquiry, the greater the impact, whereas the older the inquiry, the less impactful on your credit score. A single inquiry for a credit card can negatively impact your credit by anywhere from 3 to 10 points. However, as time passes, you will regain most, if not all, of those points.”
Why are Equifax credit scores different from TransUnion credit scores?
The truth is, although both credit bureaus use the same credit scoring model and factors to calculate credit scores, your TransUnion credit score and your Equifax credit score will rarely be identical; in some cases, your TransUnion score will be higher, while in others, your Equifax score will surpass it. Here are a few reasons why your TransUnion and Equifax scores may not exactly match:
Different information reported to credit bureaus
When a lender or creditor reports your credit data, they may not pass on your information to all of the major consumer credit bureaus. This is one of the most common reasons for credit score discrepancies. If a credit card issuer only reports to two of the three major credit bureaus, for instance, your responsible (or irresponsible) use of that credit card will not be reflected in your credit score from the third agency.
Basically, this could either hurt or help your credit score, depending on the information that’s being reported. Say you were late on a payment, for example, but it was only reported to your Equifax credit report, not TransUnion. In that case, your TransUnion score would likely be better than your Equifax score.
Similarly, credit inquiries may appear on only one credit report if a credit issuer pulls your credit history from only one credit bureau. There is no reason why a potential creditor needs to make credit inquiries from more than one credit bureau (although some do), so this would also explain why your credit scores don’t match.
Fraud or identity theft
If you have a strong credit score with one credit reporting agency but a low credit score with another, it’s possible you’ve been a victim of fraudulent activity. While it’s normal for your credit scores to differ a little, huge discrepancies could indicate a bigger problem.
For example, if your Equifax credit score is 700 but your TransUnion credit score is 600, that should be a red flag indicating that you need to dig a little deeper. Someone could have opened a credit account in your name and run up a balance without your knowledge.
Pro Tip
If for no other reason than the very real threat of identity theft or fraud, it’s good practice to check your credit regularly. That way, you can (hopefully) spot any potential problems before they become a bigger issue. Consider using credit monitoring services to make this process easier, and request your free credit report once every 12 months at www.annualcreditreport.com.
Inaccurate reporting
Sometimes, a mistake will appear on your credit report that isn’t the result of fraudulent activity. It could be an issue as simple as a credit account under a similar or even identical name that doesn’t belong to you. In other cases, you may have an account, such as an auto loan, that you’ve already paid off, but a balance still appears on your credit report.
Just as you would in the case of fraud or identity theft, be sure to dispute any errors with all three credit reporting agencies to have the inaccuracies removed as quickly as possible. This means if you notice a mistake on your TransUnion credit report, you’ll want to check your Experian and Equifax credit reports as well. While the error may only be listed on one credit report, it’s good sense to check your reports with the other credit bureaus just in case.
Also be aware that through the Fair Credit Reporting Act, credit agencies are required by federal law to protect your credit information and investigate any disputes you may have (among other responsibilities). Additionally, the Federal Trade Commission (FTC) states that “companies that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information.”
Credit reporting on different dates
Finally, while most lenders report your current credit data (payment history, credit utilization, etc.) every month to the major credit bureaus, they may not all be on the same reporting schedule. For example, some lenders may report on the first of the month, whereas others may do their reporting in the middle or at the end of the month. Depending on what day of the month you check your credit reports, this could further explain the variance in your credit scores.
Which credit score matters more: TransUnion or Equifax?
Your credit scores may not be exactly the same, but if they come from the three major credit reporting bureaus — Experian, TransUnion, and Equifax — they are equally important. Basically, unless there are mistakes or other significant discrepancies on one or more of your credit reports, they should all display an equally accurate snapshot of your credit history.
“Between Equifax and TransUnion, one is not better than the other,” explains Carla Blair-Gamblian, a credit expert for Veterans United Home Loans. “They are simply two independent entities that do the same thing: collect and provide data regarding debt habits.”
Having said that, there are cases where one credit report will carry more weight than another simply because that is the only report a lender, credit card company, or other interested party looks at. For example, if you’re trying to rent an apartment and the landlord only looks at TransUnion scores, that is going to make your Equifax credit score irrelevant.
This can be unfortunate if your score is a bit higher on the other report, but there isn’t really anything you can do about that — short of requesting the landlord evaluate all of your reports, which they aren’t obligated to do. However, since your scores should be fairly similar, this shouldn’t have much of an impact on your approval odds.
TransUnion vs. Equifax credit monitoring
In addition to generating credit reports and credit scores, both TransUnion and Equifax offer credit monitoring services to consumers. If you choose to pay for credit monitoring from one of these credit bureaus (which is typically more comprehensive than the credit monitoring offered by free services like Credit Karma), it’s worth knowing what TransUnion and Equifax can each offer you to protect your credit profile.
TransUnion credit monitoring
The TransUnion credit agency offers a one-size-fits-all approach to credit monitoring that will cost you $29.95 a month. This service offers multiple benefits to keep your credit score intact:
- Unlimited credit score updates
- Email updates of important changes to your credit history
- Instant updates if anyone has applied for credit in your name
- The ability to easily lock and unlock your credit reports from both TransUnion and Equifax
- Debt analysis of your personal credit history
- A score simulator to see how your credit score will be affected by certain debt-management choices
- Unlimited access to identity theft specialists
- Up to $1 million in identity theft insurance
TransUnion also has a mobile app, so you can easily monitor your credit when you’re on the go.
Equifax credit monitoring
Equifax provides credit monitoring services in multiple tiers, so you can choose which plan is best for you based on the price and different features offered. Here’s a quick overview of Equifax’s credit monitoring plans:
Equifax Complete: This is the base plan, available for $9.95 a month, which includes the following features:
- Alerts of key changes to your credit report
- Daily access to Equifax credit score and report
- Access to ID restoration specialists if you’re a victim of identity theft
- Ability to activate fraud alerts and lock your report
- $500,000 in identity theft insurance
Equifax Complete Premier: For $19.95 a month, you can get all the features of Equifax Complete, in addition to annual access to credit scores and reports from all three credit bureaus. Plus you’ll get $1 million in identity theft insurance and a service that periodically scans suspected fraudulent sites to search for your Social Security number, bank account numbers, credit card numbers, and medical IDs.
Equifax Family Plan: The family plan ($29.95 a month) has all the features of Equifax Complete Premier, with the bonus that you can add your spouse or partner to the plan and up to four children (note that kids are only covered for limited services).
Aside from using the services mentioned above, you can also check your own credit reports and scores, suggests Freddie Huynh, Vice President of Data Optimization at Freedom Debt Relief.
“To see actual credit scores, see if your bank, credit union, or even a lender provides scores to customers from one of the three main credit reporting agencies (they are often in online account info). Consumers also can purchase their FICO score at myfico.com.”
Pro Tip
“When you check your own information, understand the difference between credit reports and credit scores. Information from credit reports is used to develop credit scores. Therefore, it’s very important to make sure the raw info on credit reports (from the three main agencies: Equifax, Experian, TransUnion) is accurate.” — Freddie Huynh, Vice President of Data Optimization at Freedom Debt Relief
Key Takeaways
- While your credit scores may vary from one credit bureau to another, both TransUnion and Equifax credit reports should be considered equally important.
- All credit bureaus use essentially the same information to generate credit reports, including your payment history, credit usage, length of credit history, and credit mix.
- Although each credit report is slightly different, a lender or credit card company could pull your credit report from any one (or even all three) of the major credit reporting bureaus.
- To monitor your credit scores regularly, take advantage of credit monitoring services. You can also request a free credit report once a year from each major credit bureau.
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