A credit reporting agency compiles credit reports and provides that information to prospective lenders and others. Today, there are three main credit reporting agencies in the U.S.: TransUnion®, Equifax®, and Experian®. Though each agency serves a similar purpose, there may be some differences in the type of information found in their credit report.
Let’s take a closer look at credit reporting agencies and the differences between TransUnion and Equifax.
What Is the Role of Credit Reporting Agencies?
Credit reporting agencies, also known as credit bureaus, collect the information necessary to maintain credit reports. All credit reporting agencies manage their own records, which means the information they have about a consumer can differ depending on the information that was reported to them. While the reports may vary, no one credit reporting agency carries more weight than the other.
What Are Credit Scores?
A credit score is a number used by lenders to determine the risk level associated with lending money to a consumer. A borrower’s credit score can influence if a lender decides to work with a borrower and if so, how much credit, what terms, and how high of an interest rate they end up getting.
Credit scores are based on a consumer’s credit report. Everyone has more than one credit score as these scores are calculated by the three main credit reporting agencies.
Some lenders use internal scoring models as well, but generally, it’s more common for lenders to use one of the three main agencies’ reports to inform their lending decisions.
Recommended: Which Credit Bureau Is Used Most?
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What Are Credit Reports?
A credit report details information about a consumer’s financial life, such as:
• Payment history
• Outstanding balances
• Length of credit history
• Applications for new credit accounts
• Types of credit accounts (such as mortgages or credit cards)
Credit reports from each of the three major credit bureaus can be accessed annually free of charge.
Need help keeping tabs on your finances year-round? Consider using a spending tracker, which can be useful when it comes to making progress toward short- and long-term financial goals.
Recommended: What Is Considered a Bad Credit Score?
How Does Equifax Calculate Credit Scores?
An Equifax credit score isn’t used by lenders or creditors to assess a consumers’ creditworthiness. Instead, many lenders use FICO Scores® to help determine a potential borrower’s creditworthiness. FICO uses credit scores from the three reporting agencies, including Equifax and Transunion, to determine their score. Equifax recommends aiming for a score of 739 or higher if a “good” score is desired.
The Equifax credit score model falls on a credit rating scale that starts at 280 and ends at 850. The higher a score is on this scale, the better indication that the consumer poses a lower risk to creditors.
TransUnion and Equifax calculate credit scores differently. An Equifax credit score is an educational credit score. The point of this credit score is to provide consumers with the knowledge to help them predict their general credit position.
How Does TransUnion Calculate Credit Scores?
When it comes to TransUnion credit scores, this agency uses an outside model, the VantageScore® 3.0 model. The VantageScore scoring model ranges between 300 and 850 points. According to TransUnion, a “good” credit score to have on the TransUnion and VantageScore 3.0 model is between 721 and 780. VantageScores are an alternative to FICO Scores that are used by some lenders to inform their lending decisions.
What They Offer
Alongside credit scoring and credit reports, both of these credit agencies have unique offerings to help consumers understand their credit better and to provide protection against fraud.
TransUnion Offerings
TransUnion members ($29.95 per month) gain access to:
• Unlimited access to credit score and reports that are updated daily
• Recommendations to help improve credit score
• Their product, Credit Lock Plus, which allows individuals to lock their TransUnion & Equifax reports
• Up to $1 million in identity theft insurance
Equifax Offerings
Signing up for Equifax Complete ($19.95 per month) gives members access to:
• Equifax credit report monitoring
• Daily access to VantageScore credit score
• Dedicated ID restoration specialists to help members recover from identity theft
• Up to $1 million in identity theft insurance
TransUnion vs Equifax: Which is most accurate?
So, which credit report is most accurate? When it comes to accuracy, all three credit reporting agencies are responsible for ensuring that credit reports are accurate. No one agency is more accurate than the other. That being said, mistakes can happen.
Consumers may want to keep a close eye on their credit report to make sure that mistakes haven’t occurred — especially as these mistakes can negatively impact credit scores. To report errors found on a credit report, consumers can follow this process:
1. After finding errors on a credit report, write a letter that disputes these errors and include any supporting documentation that can strengthen the case against the error. You can find a sample letter here .
2. Send the letter and documentation to the credit reporting agency and the information provider (like a bank or credit card company) that reported the inaccurate information to the credit reporting agency in question. Both the credit reporting agency and the information provider will be responsible for fixing credit report inaccuracies or incomplete information.
3. If the written dispute does not result in the mistake being resolved, the next step would be to file a complaint with the Consumer Financial Protection Bureau.
TransUnion Disputes
TransUnion disputes can be filed on their website or by mail. After the documentation has been received, it can take up to 30 days to resolve the dispute.
Try to include as much of the following information as possible in the communication:
• Name
• Partial account number of the disputed item (from credit report)
• Current address
• TransUnion file number (if applicable)
• Social Security number
• Date of birth
• Name of the company that reported the item that needs disputing
• Reason for the dispute
• Any corrections to personal information that needs to be made
Disputes can also be made by phone.
Equifax Disputes
Equifax disputes can be made online, by phone, or by mail. Consumers will generally want to provide as much of the following information and documentation as possible or applicable:
• Valid driver’s license
• Birth certificate
• Copy of a utility bill
• Current bank statements with account information
• Letters from a lender showing the account in question has been corrected
• Proof that an account error was the result of identity theft
• Bankruptcy schedules and other court documents
• Student loan disability letters
• Canceled checks
Results are generally completed within 30 days.
Recommended: What Credit Score Is Needed to Buy a Car?
The Takeaway
Transunion and Equifax are two of the major credit bureaus in the U.S. They collect information about a consumer’s financial life, such as their payment history, applications for new credit, and existing credit. This information is recorded in the form of a credit report. Based on information in the credit report, each bureau determines credit scores based on their own scoring model. However, TransUnion and Equifax calculate credit scores differently, and both have unique offerings that help consumers better understand their credit and protect themselves in the event of fraud.
No matter which agency you use, it helps to have a holistic view of your finances. Using a money tracker app is one way to help you manage your spending and saving. The SoFi app connects all of your accounts in one convenient dashboard. From there, you can see all of your balances, spending breakdowns, and credit score monitoring, plus you can get other valuable financial insights.
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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
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