TransUnion Vs. Equifax: What’s the Difference?
Your credit report is perhaps the best indicator of your financial health. These are used by lenders to evaluate your trustworthiness and often determine if you can get a new credit card, a loan, or even a job.
This extensive summary of your payment history and debts is compiled by credit reporting agencies. And although these agencies generally perform the same tasks, each bureau uses different models and criteria to generate the reports.
The following article takes a closer look at two leading credit bureaus by diving into the TransUnion vs. Equifax comparison.
What’s All the Fuss About?
Your credit score is a short three-digit number that looms large over every facet of your financial life. Whether you're looking to borrow money for a new car, a home, or to start a business, you can’t afford to ignore this numerical representation of your credit history. And it’s not just the lenders who use your scores to determine your eligibility.
Good credit scores can be transformed into great deals on insurance premiums, rent, and even mobile phone plans. These scores are based on the information in your credit report and are determined by scoring models such as FICO.
What Is a Credit Report?
A credit report is compiled by one of the credit reporting agencies and contains information about a consumer's financial life. The reports typically include the following:
- Personal details
- Credit accounts
- Credit inquiries
- Accounts info (balance, credit limit, payment history)
You can access a free credit report from TransUnion or Equifax once a year.
Why Do Bureaus Have Different Credit Scores?
Aside from TransUnion and Equifax, the third major credit bureau is Experian. The big three maintain databases containing information on more than 220 million American consumers.
The companies sell the information to lenders, banks, debt collectors, and other entities that wish to review your creditworthiness and financial history during any application process. But your credit reports aren’t necessarily the same at all the credit bureaus.
When it comes to the difference between TransUnion and Equifax, the important thing to remember is that the companies generally rely on the same factors to come up with credit scores. Still, those factors are evaluated using different credit-scoring models.
Of course, there might also be slight variations in the data used to generate the scores because the major credit bureaus don’t necessarily get the same information from lenders and creditors.
It’s also worth noting that some lenders and creditors focus exclusively on scores that emphasize the information relevant to a particular industry, while others choose to blend your TransUnion or Equifax credit score with the scores from Experian.
How Does Equifax Calculate Credit Scores?
The Equifax credit score ranges from 280 to 850. Here’s a breakdown of the different levels:
Very Good: 725-759
The agency relies on a long list of factors to conduct the calculations. Generally, it focuses on the following aspects and uses the FICO scoring model:
- Payment history (35% of score)
- Credit utilization (30% of score)
- Credit history (15% of score)
- Mix of credit accounts (10% of score)
- New credit accounts (10% of score)
How Does TransUnion Calculate Credit Scores?
One of the scoring models that TransUnion uses to calculate credit scores is VantageScore® 3.0. This model scoring scale starts at 300 (the lowest) and caps at 850. Unlike with FICO where a good credit score is 670, VantageScore requires between 720 and 780.
When it comes to the TransUnion vs. Equifax comparison, both rely on some of the same consumer metrics to calculate credit scores. Below are the factors that TransUnion takes into consideration when using the VantageScore model:
- Payment history (40% of score)
- Credit type (21% of score)
- Used credit (20% of score)
- Total balance (11% of score)
- Recent credit applications and available credit (8% of score)
Now it’s time for a more detailed look at the key factors that credit score agencies take into consideration when compiling your credit reports and calculating your scores.
Believe it or not, any public records, including brush-ups with the law (speeding tickets and DUIs), negatively affect your Equifax and TransUnion score. The credit bureaus are legally allowed to include criminal records and other information when calculating your score.
The longer your credit history, the more information the credit agency has to work with, and consequently, the better your credit score. This explains why soldiers that have been away for many years do not have a credit score. If you close a credit card that you have been using for a while, you should expect your credit score to take a hit.
Every time you apply for a loan, lenders pull your credit reports. Little harm is done by a few queries every few months, but an excess reflects poorly on your credit score.
Late payments are promptly reported and added to credit reports at Equifax, TransUnion, and other bureaus. On the other hand, prompt payments of any outstanding loans positively reflect on your credit scores. This is why it’s essential to stick to your loan payment schedule no matter the cost. Better yet, avoid taking out unnecessary loans.
Credit Utilization Rate
This is the ratio of your outstanding credit balances to your total credit limits. The FICO model places slightly less emphasis on credit utilization, while this metric is more influential with VantageScore calculations.
Which Credit Score Matters More, TransUnion or Equifax?
The truth is your lender can choose any of the two or even both of these scores. It all boils down to the lender’s preferences and what aspects of your finances they’re interested in. Either way, both scores offer equally valuable information.
For personal loans and credit cards, lenders typically rely on FICO scores, which are based on the consumers’ credit reports.
How Can I Check My Credit Score?
Keeping up-to-date with your credit score is crucial for personal finance management. It’s a great way to determine whether your financial decisions have been constructive or changes need to be made.
Always check to ensure that the credit bureau has the correct information in the system to avoid any problems in the future. You can get your credit report periodically free of charge.
TransUnion is legally required to provide you with a free annual credit report. And if your TransUnion score is different from other credit bureaus, you can always ask for clarification regarding the scoring model.
If you'd like to keep a closer eye on your credit score, you can pay to get your credit reports from the bureau every month. You will most likely receive your credit report via e-mail or regular mail.
TransUnion and Equifax use different algorithms to generate credit reports. You may notice that credit reports from Equifax and credit reports from TransUnion have different credit scores. This doesn’t mean that either one of them is wrong.
The different credit scores are the result of different scoring models and variations in the information provided to the agencies. Lenders are unlikely to make any real TransUnion vs. Equifax score comparisons, with most focusing on the average score from different bureaus.
Is TransUnion more important than Equifax?
The short answer is no. Both TransUnion and Equifax are reliable credit reporting agencies that compile reports and calculate your credit scores using different scoring models.
Why are TransUnion and Equifax scores so different?
Some consumers may notice only slight differences between their TransUnion and Equifax credit scores, while for others, it might vary drastically. There are multiple reasons behind such discrepancies, including:
- Different information used by TransUnion and Equifax
- Different scoring models
- Credit scores calculated at different points in time
Which credit report is most accurate?
No credit score from any of these credit bureaus is more valuable than the other. Some lenders may have a preferred credit score bureau, but that does not mean that one is more accurate. Credit bureaus use proprietary algorithms that consider different factors.
Is TransUnion usually the highest score?
When it comes to the TransUnion vs. Equifax showdown, the latter considers your credit score status as excellent when you get to the 800 mark, while Equifax requires 760 for an excellent status. That’s because the bureaus use different scoring models.
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.