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FICO® and TransUnion® are two terms affiliated with credit that you may be familiar with. TransUnion is a consumer credit reporting agency — one of the three major credit bureaus that maintains credit reports on most consumers. FICO generally refers to a FICO credit score, which is issued by the Fair Isaac Corporation and is one of the most popular types of credit scores.
Find out more about what TransUnion and FICO are, how they are different, and why both are important for your credit report.
• TransUnion is a credit reporting agency that keeps track of people’s credit information. FICO Score, on the other hand, is a credit scoring model that looks at this information to figure out how creditworthy someone is.
• TransUnion gives credit reports that include information like past due bills and payment history. The FICO Score uses this information to come up with a number credit score.
• Lenders use TransUnion reports to review credit history and FICO Scores to gauge the risk of lending to a borrower.
• TransUnion offers credit monitoring and identity theft protection services, while FICO focuses on developing scoring models for credit risk assessment.
• Both affect loan approval decisions, interest rates, and financial opportunities, but consumers can improve their FICO Score by managing the data reported by TransUnion.
Having a good credit score is very important when it comes to your credit. But with FICO and TransUnion as the two main credit score companies, it can be hard to tell which one is more important. If you want to know which credit score is better for you, this article will tell you about FICO and TransUnion and how their reports are different.
What is FICO?
FICO is short for Fair Isaac Corporation, the company that created the FICO credit scoring model. FICO scores range from 300 to 850, with higher scores indicating better credit health.
FICO scores are calculated based on these five factors:
- Payment history (35% of score): Whether you pay your bills on time. This is the most important factor.
- Amounts owed (30%): Your credit utilization ratio – how much of your available credit you are using.
- Length of credit history (15%): How long you’ve had credit accounts opened.
- Credit mix (10%): Whether you have a variety of credit types, like credit cards, auto loans, mortgages, etc.
- New credit (10%): How many new accounts you’ve opened recently and how many hard inquiries are on your report.
FICO scores are used by 90% of top lenders when making lending decisions. Having a good FICO score can help you get approved for credit and get better terms like lower interest rates
What is TransUnion?
Along with Equifax and Experian, TransUnion is one of the three main credit bureaus. It’s not the same thing as a credit score, but TransUnion is.
TransUnion collects information on your payment history, credit accounts, debts, and other financial data to generate your credit report. This report details your borrowing history and is sent to lenders when you apply for financing.
In addition to credit reports, TransUnion also offers services like credit monitoring, identity theft protection, and fraud alerts. They also have their own credit scoring model called VantageScore that some lenders use.
Key Differences Between FICO and TransUnion
While both are important pieces of your credit profile, FICO scores and TransUnion credit reports serve different purposes:
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FICO is a credit score that is based on information about your credit. It summarizes your creditworthiness with a single number.
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TransUnion is a credit report that shows your full history of borrowing, payments, debts, etc.
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FICO uses a proprietary formula to compute your score. TransUnion just reports your factual credit information.
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FICO scores range from 300 to 850. TransUnion does not have a score range.
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90% of the biggest lenders use FICO to decide who to lend money to. TransUnion provides the full data but isn’t a score itself.
Which Credit Score Do Lenders Prefer?
The majority of lenders prefer FICO scores when evaluating credit applications because:
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FICO is trusted as the industry standard scoring model. It has been used reliably for decades.
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FICO provides a simple, easy-to-understand credit score summarized in a single number. More nuanced than just a credit report.
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The FICO formula is proven to effectively predict the risk of lending to a particular borrower.
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FICO scores are very consistent across the three credit bureaus – Equifax, TransUnion, Experian.
While lenders may review your full TransUnion credit report, the FICO score gives them an quick overview of your creditworthiness. Having a good FICO score makes it much easier to get approved for financing.
Should You Focus on FICO or TransUnion?
For the average consumer applying for credit, focusing on your FICO scores is the priority. Here’s why:
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Having excellent FICO scores makes it much easier to qualify for loans and credit cards.
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Managing your credit responsibly to maintain a high FICO score will benefit you the most.
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Checking your FICO score frequently is important since lenders rely on it so heavily.
However, your TransUnion credit report is still useful:
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Reviewing your report catches errors or suspicious activity that could be lowering your scores.
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The details in your credit report help you understand how to improve your FICO score.
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Some lenders may review your full history in addition to FICO scores.
So check both your FICO scores and TransUnion credit report, but improving your FICO should be the main focus for most consumers.
Tips for Improving Your Credit Scores
Here are key tips for boosting your FICO and TransUnion/VantageScore credit scores:
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Pay all bills on time. Payment history has the greatest impact on your scores. Set up autopay if needed.
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Keep credit card balances low. High utilization hurts your scores, so pay off cards frequently.
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Build credit history. Having old, established accounts has a positive effect.
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Mix credit types. Use credit cards, auto loans, mortgages over time.
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Limit new credit applications. Too many new accounts and hard inquiries lower scores.
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Correct errors on your report. Dispute any mistakes with the credit bureaus.
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Sign up for credit monitoring. Regularly check your scores and reports.
No matter which credit score a lender uses, maintaining responsibly managed credit will boost your FICO, TransUnion/VantageScore, and make credit approval much easier.
FAQs About FICO and TransUnion
Is my FICO score the same as my TransUnion score?
No, your FICO score will be different than your TransUnion or VantageScore. FICO uses its own proprietary formula while TransUnion uses the VantageScore model. The scores often differ by a few points.
Does TransUnion or Equifax use FICO scores?
No, TransUnion and Equifax do not generate FICO scores. They provide your credit reports with your factual history. Only Fair Isaac Corporation produces FICO scores, which use credit data from all three bureaus.
If I have good credit, will my FICO and TransUnion scores both be high?
In most cases, yes. Responsibly managing your credit will result in excellent scores across FICO, TransUnion, Equifax, and other models. But the actual numbers may vary slightly.
Which score do mortgage lenders use?
Most mortgage lenders will look at your FICO scores when evaluating home loan applications rather than your TransUnion report or score.
Can I get my credit reports without hurting my scores?
Yes, checking your own reports does not lower your scores. A hard inquiry that dings your credit only occurs when a lender checks your report while you are applying for new credit.
How can I check all my credit scores for free?
Many credit cards and personal finance sites offer free access to your latest credit scores and full reports from TransUnion, Equifax, and Experian. You can also order your free annual reports at annualcreditreport.com.
The Bottom Line
While your TransUnion credit report provides important details on your borrowing history, FICO scores are preferred by lenders for their simple snapshot of your overall creditworthiness. Focusing on improving your FICO score will benefit you the most when applying for future financing.
Regularly check both your FICO scores and TransUnion credit reports to monitor your credit health. Maintain positive credit habits like low balances and on-time payments to build excellent scores across all models. With responsible credit management, you can qualify for the best loans and credit cards more easily.
Is TransUnion the correct credit score?
TransUnion is not actually a credit score — TransUnion is a credit bureau that provides a credit report. It is one of the three major credit bureaus in the United States, along with Equifax and Experian. Lenders may pull a credit report from Equifax, Experian, or TransUnion, depending on a number of different factors that are generally out of your control as a consumer.
How to Check a TransUnion Credit Report
If you want to check your TransUnion credit report, follow these steps:
• Visit the TransUnion website: Go to TransUnion’s official site at www.TransUnion.com.
• Make an account: Give personal information like your name, address, Social Security number, and date of birth when you sign up for an account.
• Request a credit report: Once your account is set up, you can access your credit report for free once a year through AnnualCreditReport. com or request it directly from TransUnion.
• Review the report: Look through your credit report for any inaccuracies or unfamiliar accounts that could be signs of identity theft.
• Dispute errors: If you find mistakes, use TransUnion’s online platform to file a dispute for corrections.