How Reliable is Experian for Your Credit Information?

One of the three main credit bureaus in the US is Experian. The other two are Equifax and TransUnion. Credit bureaus get information about your credit history from many places and use it to figure out your credit score.

However, how accurate is the data Experian gives you? This article goes into great detail about what role Experian plays in your credit life and how accurate its credit data is.

What is Experian?

Experian is a global information services company based in Dublin, Ireland, that does business in more than 40 countries. Along with Equifax and TransUnion, it is one of the three main credit bureaus in the United States.

As a credit bureau Experian collects information about your credit history from various sources including

• Banks
• Mortgage lenders
• Credit card issuers
• Collection agencies
• Public records

Experian compiles this information into a credit report. When you apply for any kind of credit, like a mortgage, credit card, or auto loan, the lender can get a copy of your credit report from Experian.

The lenders use the information in your credit report to evaluate your creditworthiness and make a lending decision. In addition to selling your credit information to lenders, Experian also sells it to consumers. You can purchase a copy of your Experian credit report directly from Experian.

How Does Experian Calculate Your Credit Scores?

In addition to the credit report, Experian also calculates your credit scores using the data in your credit report. The most commonly used credit scores are the FICO scores, which range from 300 to 850.

Experian doesn’t actually develop the credit score models. That is done by the Fair Isaac Corporation (FICO). However, Experian does calculate your FICO scores based on the information in your Experian credit report.

The FICO scoring formulas take into various factors into account, including:

• Your payment history (makes up 35% of the score)
• Amounts owed (30%)
• Length of credit history (15%)
• Types of credit used (10%)
• New credit accounts (10%)

So Experian provides both your credit report data as well as your credit scores to lenders whenever they need to evaluate your credit for a new application.

How Reliable is Experian’s Data?

The reliability of your Experian credit information depends on two key factors:

1. Accuracy of the underlying data

Experian, like all credit bureaus, depends on external sources to compile your credit report. If any of the creditors report inaccurate information about your account to Experian, it would affect the reliability of your credit report.

According to a report from the Consumer Financial Protection Bureau, credit reports from the major credit bureaus contain inaccuracies about 20% of the time. Inaccuracies can include issues like:

• Accounts that don’t belong to you
• Incorrect account status
• Incorrect balances
• Other wrong account details

This is why it is recommended that you check your Experian credit report at least once a year. Review all account information carefully. If you find any errors, initiate a dispute process with Experian to get the inaccuracies corrected.

2. Credit scoring model used

As mentioned earlier, there are different credit scoring models available. While FICO scores are the most widely used, there are numerous versions of FICO scores as well (FICO 8, FICO 9, FICO 10, etc).

Different lenders may use different versions of the FICO score. And the scores can vary significantly across different models.

For example, your FICO 8 score provided by Experian may be different from the FICO 9 score used by another lender.

This doesn’t necessarily mean that Experian’s information is inaccurate. Just that different scoring models can lead to scoring variations even when using the same underlying data.

Apart from FICO, there are also other credit scoring models like VantageScore (developed jointly by the three credit bureaus).

So if you are checking your Experian-provided FICO score, keep in mind that the lender may be using a different scoring model.

How to Check Your Experian Credit Report and Scores

Here are some ways to check your Experian credit report and scores:

• Get your free annual credit reports: Federal law entitles you to a free credit report from Experian, Equifax, and TransUnion once every 12 months. You can obtain this by visiting AnnualCreditReport.com.

• Check other free resources: Many credit card companies and personal finance websites provide free access to your Experian credit scores and reports. For example, sites like Credit Karma and WalletHub.

• Purchase report directly from Experian: You can buy your credit reports and FICO scores directly from Experian. They offer products like Experian CreditWorks which provides unlimited daily access to your Experian reports and scores for a monthly fee.

• Sign up for free trial with Experian: Experian offers a free trial of its CreditWorks plan for seven days. You can sign up to get access to your Experian reports and scores free for a week.

The Bottom Line

To summarize, here are some key points about how reliable Experian’s credit information is:

• The reliability depends on accurate reporting from creditors. Check your reports annually for errors.

• Different credit scoring models can lead to very different scores even from the same underlying data.

• Focus on overall credit health management rather than obsessing over a particular score.

• Check your reports frequently and initiate disputes immediately if errors are found.

• Understand that lenders may be using different credit data than what you can access directly as a consumer.

As one of the three major national credit bureaus, Experian plays an important role in your financial life. Monitor your Experian reports and scores regularly. But keep the focus on building and maintaining healthy credit – your scores will follow. With prudent credit management practices, over time you can achieve excellent credit health regardless of minor inaccuracies in your credit files.