There are three major, nationally recognized consumer credit reporting agencies. They all collect information about consumers, calculate credit ratings and sell credit reports. Despite these similarities, consumers who compare their credit scores across the three agencies may find that the numbers don’t always match.
The Big Three
Equifax, Experian and TransUnion are the most widely recognized agencies. Consumers and creditors look to these companies because the firms evaluate the creditworthiness of borrowers and assign a numerical score to that evaluation. That score is used to determine not only whether or not a borrower qualifies for credit, but also what interest rate the borrower will be charged if approved. Accordingly, having a good credit score is important on multiple levels. A poor score could mean that you don’t qualify for the loan, or that – if you do qualify – the interest rate you pay will be higher than it otherwise might have been.
– Equifax has 7,000 employees and “operations in the U.S. and 18 other countries including Argentina, Brazil, Canada, Chile, Costa Rica, Ecuador, El Salvador, Honduras, India, Ireland, Mexico, Paraguay, Peru, Portugal, Russia, Spain, the United Kingdom and Uruguay.” It reports it is the market leader in the United States, as well as in most other countries in which it has a presence.
– Experian promotes itself as “the leading global information services company.” The firm “employs approximately 16,000 people in 39 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.”
– TransUnion markets itself as a “global leader in credit information and information management services.” The Chicago-based firm has “operations and affiliates in 33 countries.” It employs approximately 3,700 people.
Similar Processes, Different Results
All three rating agencies collect the same type of information about consumers. This includes personal data, such as name, address, Social Security number and date of birth. It also includes credit history, including debts, payment history and credit-application activity. Each firm uses this information to develop consumer credit reports and calculate credit scores. These scores, historically based on the FICO® Score associated with the data-analytic company originally known as Fair, Isaac and Company (the firm’s name changed to FICO in 2009), uses a numerical range of 300 to 850, in which higher scores also indicate lower credit risk.
At Equifax, the firm’s proprietary Equifax Credit Score generates a rating that can range from 280 to 850. Like the FICO score, a higher number indicates better creditworthiness. Experian calculates proprietary credit scores based on its proprietary Experian/FICO® Risk Model v2. Trans Union uses the VantageScore, which was created through a cooperative effort among Equifax, Experian and Trans Union as an alternative to the FICO score.
Each of the scoring methodologies (including FICO) has undergone changes throughout the years as part of ongoing efforts to improve accuracy. Comparing scores may not yield exactly the same numbers due to a variety of factors, including proprietary calculation methodologies and gaps in information reporting and gathering. Keep in mind that, on any given day, one firm may have different information about you on file than the others.
The Bottom Line
Companies and methodologies aside – you can't control which agency a company researching you will consult – higher is always better. While comparing scores may not reveal identical numbers, it is still a useful exercise. If you have a good score at one company, you should have good scores at all of them, even if the actual numbers are slightly different.
To get your annual free credit report from each agency, go to https://www.annualcreditreport.com/index.action. Spacing out your requests during the year will help you monitor how you rate. To learn more about the process, read Top Places To Get A Free Credit Score Or Report.