What are the 3 main credit score companies?
The three credit bureaus are TransUnion®, Experian® and Equifax®. Also known as credit reporting agencies (CRA), credit bureaus are businesses that gather data from creditors, lenders, and public records to create credit reports and credit scores.
The score models can be divided into three major types: FICO, VantageScore and other credit scores.
Simply put, there is no “more accurate” score when it comes down to receiving your score from the major credit bureaus.
The Big Three credit rating agencies are S&P Global Ratings (S&P), Moody's, and Fitch Group. S&P and Moody's are based in the US, while Fitch is dual-headquartered in New York City and London, and is controlled by Hearst.
While most lenders use the FICO Score 8, mortgage lenders use the following scores: Experian: FICO Score 2, or Fair Isaac Risk Model v2. Equifax: FICO Score 5, or Equifax Beacon 5. TransUnion: FICO Score 4, or TransUnion FICO Risk Score 04.
For three-bureau VantageScore credit scores, data from Equifax®, Experian®, and TransUnion® are used respectively. Any one-bureau VantageScore uses Equifax data. Third parties use many different types of credit scores and are likely to use a different type of credit score to assess your creditworthiness.
FICO considers anything between 670 and 739 a good credit score. And VantageScore says good credit scores fall between 661 and 780. Scores above those might be considered very good, excellent or exceptional.
FICO ® Scores are the most widely used credit scores—90% of top lenders use FICO ® Scores.
There isn't one “more accurate” report. The most accurate report in any individual case is the one that has the most complete information. Creditors don't have to report to any of the credit bureaus, and they certainly aren't required to report to all of them. Some lenders only report to one or two of the bureaus.
The FICO credit-scoring model has been updated over the years, resulting in multiple versions of the score. FICO Score 8 is the most commonly used. But the version may vary by lender and credit product, like applying for a credit card versus financing a car.
Do banks use TransUnion or Equifax?
Mortgage lenders pull all three credit reports
According to Darrin English, a senior community development loan officer at Quontic Bank, mortgage lenders request your FICO scores from all three bureaus — Equifax, Transunion and Experian. But they only use one when making their final decision.
The five Cs of credit are important because lenders use these factors to determine whether to approve you for a financial product. Lenders also use these five Cs—character, capacity, capital, collateral, and conditions—to set your loan rates and loan terms.
It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.
Dave Ramsey Says Credit Scores Are Just 'I Love Debt Ratings' And Insists They Are In No Way An Indication Of Wealth — 'Our Culture Worships At The Altar Of The FICO Score'
Highest credit quality
'AAA' ratings denote the lowest expectation of default risk.
Just two companies in the S&P 500, Johnson & Johnson JNJ and Microsoft MSFT, maintain their AAA credit ratings from S&P, per an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
| Date : | 15-Aug-2023 | 07-Jun-2021 |
|---|---|---|
| Rating : | AA- | AA- |
| Action : | Review - No Action | Upgrade |
Equifax and Experian are the most commonly used credit bureaus by auto lenders. They offer services that are directed specifically at the auto industry, and each gets a portion of their revenue from the industry.
Of the three main credit bureaus (Equifax, Experian, and TransUnion), none is considered better than the others. A lender may rely on a report from one bureau or all three bureaus to make its decisions about approving a loan.
Mortgage lenders primarily look at FICO® Scores 2, 4 and 5 when determining a borrower's creditworthiness as they apply for a home loan.
Can I trust Experian?
Yes. Along with TransUnion and Equifax, Experian is recognized by financial institutions around the world as a safe, authoritative and trustworthy credit reporting agency.
Credit scoring models can weigh certain information in your reports more heavily than other credit score factors. For example, one scoring model may put more emphasis on total credit usage than others. Because there are varied scoring models, you'll likely have different scores from different providers.
Many lenders furnish information to all three major credit bureaus, but some may furnish information to just one or two of them. This difference in data results in distinct credit reports with each bureau and can lead to differing credit scores across the bureaus.
Your credit score is a major factor in whether you'll be approved for a car loan. Some lenders use specialized credit scores, such as a FICO Auto Score. In general, you'll need at least prime credit, meaning a credit score of 661 or up, to get a loan at a good interest rate.
CreditWise is a valuable tool for individuals looking to monitor and understand their credit scores, offering a slew of features and insights. While it offers accuracy close to other similar tools, users should be aware of its limitations and the prevalence of FICO scores in lending decisions.
