Which credit score is more important equifax or transunion

As you plan your financial future, you’ll come to realize the importance of credit. Your credit is what many banks and credit card companies use to determine whether or not to offer you a loan or line of credit. Your credit score is made up of many factors, including the length of your credit history, the standing of your current and past credit accounts and the amount of available credit you have. Three different reporting companies compile your credit information. These companies assign you individual scores, which can vary.

Tips

• Equifax and TransUnion differ in how far they go back in your credit history, how they weigh accounts and how they present your information. The credit scores also can differ in their calculations depending on how up-to-date and accurate each bureau's information is.

Credit Reporting Agencies

In the United States, banks and other lending institutions use three different credit bureaus – Equifax, Experian and TransUnion – to determine your creditworthiness. Banks select certain agencies or even certain types of reports within those agencies to purchase credit information for customers applying for credit. For example, a bank that is determining whether to offer you a car loan – and at what rate – may purchase an industry-specific FICO score, which reflects your past auto loan history and payments.

Equifax Score

Your Equifax score likely differs from your TransUnion or Experian score. That’s because Equifax tracks your accounts differently than the other credit reporting bureaus. Instead of grouping all of your present and past accounts together, Equifax separates your credit accounts into “open” and “closed” categories. This means that a credit card account closed four years ago may be weighted differently than one that is currently open. Equifax also uses an 81-month credit history, which differs from the traditional seven years that other agencies use.

TransUnion Score

TransUnion uses most of the same personal information that Equifax does in scoring your credit; however, TransUnion may find certain aspects of your credit history more important than Equifax does. For example, TransUnion credit reports feature a more extensive employment history section. This report notes your current and previous employer, your position and your hiring date. Banks may use your TransUnion report to verify your employment information. Additionally, your TransUnion report shows a unique credit account scoring method, which uses colors to reflect your account standing and symbols to show on-time, late or unpaid payments.

Comparing Scores

Both Equifax and TransUnion use the Fair Isaac Corporation (FICO) mathematical formula to calculate credit, but since each agency has access to different pieces of information, that mathematical formula won't always calculate the same score. Credit report errors are also very common, so while Equifax may have your correct information, TransUnion may not – and vice versa. Check your credit reports from all bureaus regularly for any incorrect information that could be bringing your score down. You can obtain a credit report from Equifax, TransUnion or Experian directly, or you can go through one of many credit monitoring services in the market.

A credit score is a three-digit number that lenders use to determine whether you’ll get approved for financial products like credit cards and loans.

Credit scores typically range from 300 to 850, but there are dozens of versions — from base scores to industry-specific scores —  that make it tricky to know which one you're being evaluated on during the application process.

You may check your score with your credit card company or on a personal finance site only to find it differs on another, making it hard to know what credit score range you fall in and which products you have the best chance of qualifying for. And when a lender pulls your credit score, they may request it from a different credit bureau — Experian, Equifax or TransUnion — and/or request a specific version that varies from the one you checked.

Most credit scores weigh the same factors, such as payment history, utilization rate, length of credit history, number of new inquiries and variety of credit products. However, there may be score differences for a variety of reasons, which CNBC Select breaks down below.

6 reasons why your credit score differs

1. Credit scoring model used: There are several models out there for scoring your credit history. But typically, lenders use one of the two main credit scoring models — FICO or VantageScore. Both companies evaluate the same main factors of your credit history like payment history and utilization rate, but use their own formulas to weigh each factor.
2. Score version: There are dozens of credit score versions that are broken up into base scores and industry-specific scores. Base scores, such as FICO® Score 8 or VantageScore 3.0, show lenders the likelihood you’ll repay any credit obligation. Industry-specific scores represent the odds you’ll repay a specific loan, such as the FICO® Auto Score 9 used in auto loan decisions.
3. Credit bureau: Credit scores are calculated using data listed on your credit report, which comes from one of the three major credit bureaus — Experian, Equifax or TransUnion. Your score differs based on the information provided to each bureau, explained more next.
4. Information provided to the credit bureaus: The credit bureaus may not receive all of the same information about your credit accounts. Surprisingly, lenders aren’t required to report to all or any of the three bureaus. While most do, there's no guarantee that the information will be the same across the board, creating potential differences in your scores.
5. Date scores are accessed: If you view your credit score at different times, there may be discrepancies since one score may be outdated.
6. Errors on your credit report: Your credit score can reflect any errors that appear on your credit report. If errors only appear on one bureau's report, then your credit score from that report may differ from another that has no errors. You should dispute errors on your credit report right away to avoid harm to your credit score.

Which credit score matters the most?

While there's no exact answer to which credit score matters most, lenders have a clear favorite: FICO® Scores are used in over 90% of lending decisions.

While that can help you narrow down which credit score to check, you'll still have to consider the reason why you're checking your credit score. If you're accessing your credit score simply to track your finances, a widely-used base score like FICO® Score 8 works. This version is also helpful for gauging which credit cards you qualify for. 

If you plan to make a specific purchase, you may want to review an industry-specific credit score.FICO lists the specific scores that are used for various financial products. FICO® Auto Scores are ideal if you want to finance a car with an auto loan, while it's good to check FICO® Scores 2, 5 and 4 if you plan to buy a house.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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