Your credit score is important. It’s one of the things lenders consider when you apply for loans or lines of credit. Your score has some influence on whether you’re approved for new credit and it also impacts the interest rate lenders charge you. However, credit scores differ between major agencies. So, what are the differences between Equifax, Experian and TransUnion – the “big three” credit bureaus?
The “big three”collect the information that’s included in your credit reports. Here’s a quick overview of what their differences are and what role they play in shaping your credit scores.
Credit bureaus only collect certain information
Your credit report includes two types of information: personal and financial. On the personal side, the three credit bureaus include your name, Social Security number, address history and employment history in your report. But, none of this information impacts your credit score.
That’s what your financial information is for. All three bureaus keep track of things like how many credit accounts you have, the types of credit you’re using, the age of your accounts, your payment history and balances, your available credit limit, how often you apply for new credit, collection accounts and public records. Five factors (payment history, credit usage, credit age, types of credit and inquiries for new credit) directly affect your credit score.
Here are some of the major differences between the “big three” credit agencies.
Difference 1: What data is reported
One of the differences between Equifax, Experian and TransUnion is what information they get from your creditors. The “big three” track your credit information but they rely on your creditors to report it. Credit cards are typically reported to all three bureaus but something like a personal loan from your local credit union may only be reported to one bureau, or not at all. So, the data that are used to calculate your credit score differ between the three agencies.
Difference 2: How scores are calculated
You also need to understand that the credit bureaus can use their own individual scoring models to create your scores. The most widely used scoring model is the FICO credit score, but all three bureaus have their own proprietary models. If you compare your FICO score vs. free credit score options offered by the bureaus, they might be very different.
Difference 3: The amount of information in reports
While all “big three” agencies provide roughly the same information on your report, there are differences in how the amount of detail displayed in each report. For example, TransUnion shows detailed employment information whereas the other agencies do not. Experian also tells you when an account will fall off your profile, which is great if you have blemishes you want to get rid of.
Okay, so those are some of the differences between Equifax, Experian and TransUnion credit reports. What can you do if you if you feel the scores are mistaken?
Add a consumer statement
Federal law allows you to enter a 100 word “consumer statement” on any disputed item in any of your credit reports. This is something you might want to consider because doing it makes you better educated about your credit. It also helps any potential lender to better understand your situation if you need to take out a loan.
Dispute errors on your credit
If you see an error on your credit report, you can contact the bureau that’s reporting the information to dispute it. If the bureau verifies the error, they legally have to correct it or remove it, potentially giving your score a boost in the process.
Get your credit score for free
While you could pay for a copy of your credit report or to see your credit score, you don’t have to. You can get your free credit score instantly, for example, when you create a Credit Sesame member account. You can also get a free credit score from annualcreditreport.com – but that is limited to one free report per year.
Understanding the differences between the credit bureaus and their role is in credit reporting can help you build a stronger score. And if you’re working on improving your credit, remember that you can track your progress for free using several options – including a free Credit Sesame account.
For more on managing your credit, read our articles on:
What is a credit freeze and why should you do it?
What is the starting credit score?
How to contact the credit reporting agencies?
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