The look of your credit score can be deceiving. If you’re worried you have a low credit score, it may have something to do with which credit reporting agency you’re using.
Two of the major credit bureaus are TransUnion® and Equifax®. While both collect and store your credit information, they do so in slightly different ways.
Let’s look at how TransUnion and Equifax calculate your credit score. We’ll also explain why you may see different results from the two credit bureaus.
Having a good credit score is important for getting approved for loans and credit cards at favorable interest rates. But if you check your credit and find your TransUnion score is significantly lower than your Equifax score, it can be confusing and concerning.
In this article, we’ll look at some of the main reasons your TransUnion credit score may be lower, whether one is more important than the other, and steps you can take if you have a large discrepancy between your TransUnion and Equifax scores.
How Credit Scores Are Calculated
Before diving into why the scores can differ, it helps to understand what goes into calculating credit scores in the first place.
Equifax, Experian, and TransUnion are the three main consumer credit bureaus. Each uses its own formulas and models to figure out your credit score.
While the exact formulas are secret, we know they take into account factors like:
- Payment history – Whether you pay your bills on time. This is the most important factor.
- Credit utilization – How much of your available credit you are using. Lower utilization is better.
- Credit history length – How long you’ve had credit accounts opened. Longer is better.
- Total accounts – The number and mix of credit accounts you have (credit cards, loans, etc).
- Hard inquiries – When you apply for new credit, which causes a hard inquiry on your report.
- Derogatory marks – Negative items like collections, bankruptcies, and late payments.
As you can see, there is a lot of data going into these credit score calculations. And since Equifax and TransUnion use different formulas, it’s not surprising scores can come out quite different.
Main Reasons for Score Differences
Given how credit scores are made, these are some of the main reasons your TransUnion score might be lower than your Equifax score:
1 Differences in payment history data
One late payment showing up in one bureau’s data but not in the other bureaus’ can have a big effect on the score. Depending on your profile, even one payment that is 30 days late can hurt your score by more than 100 points.
2 Differences in reported credit limits and balances
If different credit bureaus report different credit limits, it can change how much credit you use, which is a big part of your score. For instance, if Equifax shows a $5,000 limit for the same card but TransUnion shows a $2,000 limit, TransUnion will show that you are using your card more.
3. One bureau has outdated account information
If you recently paid off an installment loan or credit card but it hasn’t been reported to all the bureaus yet, your balances with the outdated bureau will look higher, again impacting your utilization.
4. Differences in hard inquiries
If Equifax doesn’t show a recent hard inquiry that TransUnion has listed, your TransUnion score will take a bigger hit from that inquiry.
5. Variations in credit scoring models
TransUnion may weight certain factors like utilization or payment history more heavily in their calculations than Equifax, resulting in larger impacts to your score if there are any negative items.
Is One Score More Important Than the Other?
Since the credit bureaus can have different information and calculate scores differently, which credit score do lenders actually use?
The truth is lenders rarely rely on just one credit score from one bureau. Most lenders use a blended scoring model that compiles data from multiple bureaus to calculate your creditworthiness.
According to a Consumer Financial Protection Bureau report, 90% of lending decisions rely on FICO scores, with over 70% of lenders pulling all three credit bureau reports.
That means there generally isn’t one single credit score that will make or break your application. Lenders look at the full picture your reports are painting to determine your credit risk.
However, it’s a good idea to check all three of your credit bureau reports and scores regularly because you never know when one agency may have incorrect information bringing your score down.
How to Check Your Scores
The first step is getting access to view all three of your credit reports and scores so you can compare them side by side. Here are a few options:
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AnnualCreditReport.com – Get your credit reports from each bureau for free once per year. You can request one from Equifax, Experian, and TransUnion. Reports won’t include scores.
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Credit monitoring services – Companies like Credit Karma provide free access to your TransUnion and Equifax credit scores using the VantageScore model. For access to FICO scores, services like Experian and myFICO offer trial periods for a monthly fee.
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Credit cards and lenders – Many credit card companies like Discover and Citi provide free access to your FICO score each month on their websites or in statements.
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Purchase your score – You can purchase your score directly from myFICO.com or from the credit bureaus. Expect to pay around $20-$40 for a single bureau report and FICO score.
Once you pull your reports, here’s what to look for when comparing your TransUnion data to Equifax:
- Check payment history for any differences or inaccuracies.
- Compare current credit limits and balances for each account.
- Look for hard inquiries that don’t match.
- Watch out for old accounts showing active that should be closed.
What to Do if You See a Discrepancy
If you spot some discrepancies that help explain the score difference, here are some steps to take:
Dispute errors – If there are any accounts, balances, or inquiries that don’t look right, file disputes with the bureaus to get them corrected.
Pay down balances – If your utilization looks higher with one bureau, focus on paying down those balances to even out your utilization.
Monitor changes – Check your scores again in one month to see if updated account information has resolved any discrepancies.
The good news is scores fluctuate all the time and small differences of 20-30 points between bureaus is normal. But if you have a difference of 80+ points or more, take action to understand what is causing it and improve your lower score.
With a solid credit monitoring plan and dispute process in place, you can rest assured the information in your reports is accurate. Then your scores across Equifax, TransUnion and Experian will better reflect your true creditworthiness when applying for your next loan or credit card.
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The two agencies also differ in how they calculate your credit score, typically resulting in a different credit score from each.
TransUnion uses the VantageScore® credit scoring model to calculate your credit score. This model ranges from 300 to 850. A “good” score may rest in the 661 – 720 range. Equifax, meanwhile, uses its own scoring model with a range of 280 – 850, with “good” being 670 – 739 and higher.
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No credit score is necessarily better or more accurate than the other. However, your credit score can make a difference when you’re trying to get a personal loan, mortgage or auto loan.
Lenders typically use your FICO® Score to gauge your creditworthiness. Compared to TransUnion’s algorithm, Equifax’s algorithm more closely resembles the FICO® model. Therefore, your Equifax score may better predict whether you’ll qualify for a loan.
Your Equifax score won’t be a tell-all, though. In some cases, lenders may look at your scores from all three credit bureaus and take the median score. If they only look at two of the three bureaus, they’ll likely take the lower of the two scores. If you’re co-borrowing a loan, lenders will take the lowest median of the two borrowers.
Since each credit bureau uses a different scoring algorithm, a “good” score may appear “fair” on another scale. When applying for a personal loan, make sure your lowest score qualifies you for good rates and terms. A good credit score for a personal loan would be 650 or higher to get favorable rates and terms.
Why Is My Transunion Score Lower Than Equifax? – CreditGuide360.com
FAQ
Why is my TransUnion score lower than my Equifax score?
Here are the main reasons why your TransUnion score might be lower than your Equifax score: 1. Different Scoring Models: Each credit bureau has its own scoring model that it uses to figure out credit scores. These models look at things like payment history, credit utilization, credit mix, credit age, and inquiries.
Are TransUnion and Equifax credit scores the same?
The truth is, although both credit bureaus use the same credit scoring model and factors to calculate credit scores, your TransUnion credit score and your Equifax credit score will rarely be identical; in some cases, your TransUnion score will be higher, while in others, your Equifax score will surpass it.
How can I Check my Equifax & TransUnion credit score?
To check both my Equifax and Transunion scores, I signed up for both Credit Karma and Borrowell. They are a free credit reporting website. To sign up with both these resources, it is free. They make it free to check your credit score by providing recommendations and credit card referrals for commissions.
What is the difference between Fico and TransUnion credit score?
Credit utilization accounts for a smaller percentage of the TransUnion score than the FICO credit score, at 20%. New credit accounts (5%) are also less important for TransUnion than for FICO, and your available credit counts for 3%. Additionally, your latest reported balance totals account for 11%. Atlanta-based Equifax was founded in 1899.
Why is my TransUnion credit score lower than my credit score?
This score is lower than your TransUnion score because TransUnion adds personal and employment data that is weighted into their model. The other two only show one credit report and the name of your employer and do not add any weight to that fact.
Is TransUnion or Equifax more accurate?
Do lenders look at Equifax or TransUnion?
Why is my TransUnion score so low?
Important factors like your payment history, credit utilization, new credit and account closures can impact your credit score. It’s also possible that your score dropped because of false information on your credit report, so check it often.
Why is my Equifax score higher than TransUnion?