Equifax® is one of the “Big 3” credit bureaus for both consumers and businesses. Equifax® credit scores are used by lenders, insurance companies, and other businesses to help them make better decisions.
As a small business owner, you should use Equifax® to check, build, and keep an eye on your personal and business credit. Here, we’ll explain how to understand and optimize Equifax® business credit scores.
If you’re not familiar with business credit, here are a few reasons why this is important. A small business with good credit may be able to get a small business loan or line of credit, or it may be able to get more credit. A strong business credit history may help your business save money with lower interest rates. It can also make it easier to get payment terms (such as net-30 accounts) with suppliers and vendors.
Good credit may make it easier for your business to open new accounts with utility companies, cell phone providers, telcos, or other service providers. It may make your business more attractive to clients or potential business partners. And your business may qualify for lower insurance premiums with a good business credit rating.
All those potential benefits are reasons to check your business credit scores and reports, and to take time to build and maintain good credit.
Actively build business credit history, improve the metrics that matter, and access your best financing options – only at Nav.
You’re not the only one who has noticed that your Equifax score is much lower than your Experian and TransUnion scores when you check your credit score from different places. A lot of people don’t understand why their Equifax credit score is 40 to 50 points lower than their other scores.
In this comprehensive guide, we’ll explore the reasons why Equifax scores tend to lag behind and provide actionable tips to improve your Equifax credit score.
An Overview of Credit Bureaus and Scoring Models
Before diving into why Equifax scores are often lower, it’s important to understand the role of the three major credit bureaus – Equifax, Experian, and TransUnion. While they are all credit reporting agencies that collect financial data on individuals, they don’t share all of the same information with each other.
For example, you may have a credit card that gets reported to Experian but not Equifax. This disparity in data being reported can certainly impact the different scoring models.
On top of that while the most widely used credit scores come from FICO the bureaus have their own proprietary scoring models. So an Equifax FICO 8 score utilizes Equifax’s reported data while an Equifax VantageScore uses the same data set.
In the end, most of the score differences can be explained by differences in credit bureau data and scoring models.
Key Factors That Influence Your Equifax Credit Score
As you probably know, FICO and VantageScore grading systems take into account five core factors:
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Payment history: A record of both on-time payments and bad marks like foreclosures, collections, and bankruptcies.
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Credit utilization – Ratio of credit balances to total available credit limits.
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Credit history length – How long your accounts have been open. Generally longer is better.
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Credit mix – Variety of account types including credit cards, installment loans, mortgages, etc.
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New credit – Number of recently opened accounts and credit inquiries.
Payment history and credit utilization carry the most weight, comprising 65% of your score. Now let’s explore why Equifax scores tend to lag in these pivotal categories.
Equifax’s Unique Data Set Impacts Your Score
While Experian, Equifax, and TransUnion collect overlapping information, their individual credit reports can have key differences. For instance, you may have late payments reported to Equifax that don’t appear at other bureaus. Here are some data discrepancies that could cause Equifax to downgrade your score:
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Payments that were late or not made at all can hurt your credit score if the lender only reports to Equifax.
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Inaccurate information – Errors only appearing on your Equifax report negatively impact your score. Disputing errors can fix this.
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Closed accounts – If you close an old credit card, Equifax may stop updating that account sooner than other bureaus. This can shorten your credit history.
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High balances – If more accounts report balances to Equifax, your overall utilization rate may be higher with them.
As you can see, even minor reporting inconsistencies can significantly impact your Equifax score.
Strategies to Improve Your Equifax Credit Score
Now that you know why Equifax tends to be lower, here are some proven ways to improve it:
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Check Equifax report for errors – Dispute any inaccuracies that may be dragging down your score.
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Pay down balances – Reduce credit card balances below 30% of the limit, with lower being ideal.
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Pay all bills on time – Payment history is crucial, so never miss due dates.
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Keep old accounts open – Having long credit history with active accounts helps your score. Avoid closing old cards.
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Limit new credit – New credit inquiries and accounts can ding your score temporarily. Only apply for what you truly need.
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Ask for credit line increases – Higher limits lower your utilization ratio and can boost your score.
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Monitor Equifax updates – Check your Equifax report regularly to ensure positive changes are being reported.
With diligence and patience, you can improve your Equifax credit score over time. But keep in mind, a “fair” score with Equifax means you still have “fair” credit overall. Scoring model nuances make little real difference.
Does the Equifax Hack Still Impact Credit Scores?
In 2017, Equifax experienced a massive data breach that exposed the private information of 147 million Americans. Social Security numbers, birth dates, addresses, and some driver’s license numbers were compromised.
This was the worst data breach in history, undermining the credibility of Equifax. However, this hack occurred in the non-credit reporting database. The separate credit reporting database with financial history was not accessed.
Rest assured, the 2017 Equifax breach has no lingering impact on your current Equifax credit report or score. But it’s still a good idea to place a credit freeze with Equifax to protect your data. This prevents new accounts from being opened without your approval.
Frequently Asked Questions About Equifax Credit Scores
Here are answers to some common questions regarding Equifax credit scores:
Is the Equifax scoring model less accurate?
No scoring model is inherently more accurate. But differences in reported data can impact your Equifax score. Overall, it provides an accurate view of your creditworthiness.
Will paying off collections help my Equifax score?
Yes! Paying off collection accounts in good standing improves your Equifax score over time by resolving these derogatory marks.
Is it bad if my Equifax score is low?
Not necessarily. Look at your overall credit picture. Just keep in mind, improvement with Equifax should lead to a better score with all bureaus.
Does getting married impact your Equifax score?
It could. Your spouse’s credit accounts may start getting reported to Equifax after marriage, affecting your combined credit utilization.
How long do late payments stay on your Equifax report?
Negative marks like late payments typically remain on your Equifax report for seven years from the date of the first missed payment.
Does checking your Equifax score hurt it?
Nope! Checking your own Equifax credit score triggers a “soft inquiry” that has no impact on your score. Only “hard inquiries” from applications for new credit get factored in.
The Takeaway – Understand Your Full Credit Profile
While a lower Equifax score can be frustrating, remember that no single credit score tells your whole story. Differences between the bureaus are normal. Focus on improving all components of your credit across the board.
Be sure to check your full credit reports from Equifax, Experian, and TransUnion each year. Also monitor your credit scores using various scoring models. This provides the complete picture of your financial health.
With vigilance, patience, and smart credit habits, your Equifax score and overall credit rating will steadily improve over time. Don’t obsess over credit score nuances. The journey to excellent credit is marathon, not a sprint.
Equifax® OneScore for Commercial
This score predicts the likelihood of a financial account becoming severely delinquent, 91 or more days past due, including major derogatory events and bankruptcies within 24 months following origination to any provider of services on financial institutions.
Score range: 300–660
What Is Factored Into an Equifax Business Credit Report?
Most Equifax® business credit reports are purchased by companies that want to mitigate risk when doing business with another business. The report is geared toward those companies and what they need to know.
If you are checking your own Equifax® business credit report–we’ll explain how in a minute–your report may look a little different than what we describe here.
This section includes details such as business name, address, tax id, business structure (corporation or LLC), when it was established, number of employees, industry codes (SIC and/or NAICS codes).
An Equifax® identification number (EFX ID) will also be listed. This is a 9-digit number created by Equifax® and used to track the business.
Tip: When you start building business credit, it is helpful to build your foundation to make sure these details represent your business. Read Nav’s Checklist to Make Your Business Legit to learn how.
Companies that purchase credit reports from Equifax® about other businesses will get alerts if there are key differences between the company they inquired about and the credit report that was supplied.
Different sections of the report will list how many inquiries are on file, and when those inquiries occurred. It won’t list the names of companies that inquired.
Companies that purchase these reports also get information that helps them understand whether they are looking at the credit file of the correct business.
A public record is information that is recorded by a public agency. In the case of credit reports, that typically means information filed with the courts such as lawsuits, liens (UCC filings and/or tax liens), judgments, and bankruptcy.
In addition to bankruptcy, liens, or judgments on file for the business, this section will also include business registration information obtained from the Secretary of State or other sources. This can include the registered name of the business, the incorporation date and state where incorporated, the incorporation status, and the contact name, title and address for the business.
This section summarizes payment history, the single most important factor that influences business credit scores. Business credit reports often use “Days Beyond Terms” (DBT) to describe how many days beyond the due date a payment was made. For example, if your terms with a vendor is “net-30,” and you pay on day 34, the account will be reported as 4 DBT.
In the case of Equifax® Commercial reports, this section displays the dollar-weighted average days beyond terms on non-financial accounts within the last 12 months from the date of the inquiry. It’s also worth noting that Equifax® provides the average days beyond terms for the inquired businesses industry, and for all businesses (nationally) in the Equifax® commercial database. This helps the company reviewing the report to evaluate how that business compares to others.
Remember that payment history is very important to lenders and other companies that purchase business credit reports. Equifax® also includes their Payment Index, which helps summarize payment history with a “dollar weighted indicator of a businesses payment performance based on the most recently reported non-financial payment experiences in the Equifax® commercial database.” Here’s how Equifax suggests this be interpreted:
| Payment Index | Days Past Due |
| 90+ | Pays as agreed |
| 80-89 | 1-30 days past due |
| 60-79 | 31-60 days past due |
| 40-59 | 61-90 days past due |
| 20-39 | 91-120 |
| 1-19 | 12-+ days past due |
Source: Equifax® Business Training Guide
Lenders and companies that purchase credit reports from Equifax® can also purchase credit scores. We’ll talk about those in more detail in a moment.
Equifax® will summarize and feature information about the businesses’ credit history in this section. It may include:
- How long the company has actively had business credit accounts
- How many accounts have been opened/closed/updated
- Delinquencies (new delinquencies, non-charge offs and charge offs, including amount)
- Most severe status
- Single highest credit extended
- Total current credit exposure and highest credit exposure
- Number of inquiries
It will also summarize and analyze open accounts, with:
- Total/median/average balance
- Current portion of balance due
- Delinquent non-charged off accounts
- Total past due and at risk balance
If the business has non-financial credit accounts listed on their Equifax® business credit reports, the report will go into detail about these tradelines, providing a history that may include the balance, amount past due, payment due, and other relevant details.