credit mark terminology can get confuse .
For such a simple idea – quantifying a borrower ’ s creditworthiness with a number – it ’ sulfur amazing how many terms, companies, and concepts a consumer needs to know just to grasp the basics.
thus when it comes to names like Equifax, TransUnion, Experian, FICO, and VantageScore, how can the average consumer keep it all straight ? How do these terms relate to each other, and how do they influence a credit score ?
Let ’ s start by taking one of these terms – Equifax – and breaking down what you need to know .
What is Equifax?
Equifax is a credit chest of drawers, or a company that compiles data about individual consumer lend habits to create a credit rating composition. Equifax is the oldest accredit agency and began in 1899 as the Retail Credit Company .
There are two early major accredit chest of drawers, Experian and TransUnion. When you check your credit report, it will constantly be from one of the three accredit agency .
Lenders, banks, and credit card companies report account bodily process to accredit bureaus like Equifax. If you ’ re evicted or default on a checkup bill, your landlord or doctor of the church ’ sulfur agency may report that information to Equifax and the other recognition chest of drawers .
Companies are not legally required to report information to all three credit chest of drawers, which explains the discrepancies between one credit report and another .
🤔 Did you know that 90 % of lenders use FICO accredit scores for underwriting decisions ?
When you apply for a new loanword, credit batting order, or other lines of citation, the lender or credit card provider will look up your credit report. They may view reports from all three credit chest of drawers or just one or two. If you ’ re applying for a major loan like a mortgage, the lender will pull credit reports from all three .
When it comes to TransUnion vs. Equifax, some consumers assume TransUnion is more reputable because of the 2017 Equifax hack. In reality, both companies have experienced data breaches in late years .
In 2019, TransUnion announced that a hack could have affected about 37,000 canadian consumers. This is much smaller than the Equifax hack, which affected 147 million people. In general, all three credit chest of drawers collect like information about your habits and are long-standing companies .
How to Check Your Equifax Credit Score
Consumers who want to check Equifax scores have two options. They can either view their Equifax FICO score or their Equifax VantageScore. FICO and VantageScore are the two chief credit seduce models that lenders use when approving an applicant .
FICO is more far-flung, with over 90 % of banks, credit card servicers, and loan companies relying on FICO credit scores. Free credit grade sites normally trust on VantageScore. There are other credit score models, but they ’ re rarely used .
You can check your Equifax FICO score through MyFICO, which shows all 28 FICO recognition scores. There are different recognition score models for versatile lenders, such as mortgage lenders, car lenders, and credit card companies. That ’ randomness why you ’ re likely to see multiple Equifax FICO scores .
Ways to Boost Your Equifax Score
Your Equifax recognition score is important. It can affect the matter to rate you receive on your mortgage, the accredit cards you qualify for, and even whether or not you can sign a rent without a cosigner .
Understanding FICO Scores
Did you know lenders pull different FICO scores when you apply for a cable car loan vs a dwelling loan ? And however another for credit cards ? And the scores can vary ( a LOT ! )
👉 Learn all about the 30+ unlike credit scores you have .
An Equifax boost can improve your chances of getting a better manage on a mortgage or car lend .
Track Your Credit Score
first base, check what type of credit score you have through the MyFICO site, which shows all 28 variations of the FICO credit score .
If you sign up for regular monitoring, you ’ ll receive an updated score once a month.
Seeing your latest credit grade will help keep you on the right track .
Make Payments on Time
On-time payment history accounts for 35 % of your FICO credit score. Your score will increase if you pay your bills on time, but missing even one payment could cause a meaning dip .
Find a way to ensure you never miss a payment. even if you have autopay or charge pay set up, always monitor your loans and accredit cards to verify that a payment went through .
Lower Your Credit Card Utilization
If you have credit cards, check that your utilization percentage is lower than 30 %. This share is calculated by dividing the current libra by the master accredit limit .
If your current balance is $ 300 and the credit limit is $ 1,500, your utilization share is 20 % .
Credit calling card companies don ’ t monitor this ratio, so you ’ ll have to do the mathematics yourself .
🧮️ Use our credit utilization proportion calculator to find yours…
Keep Old Accounts Open
The average age of your credit history makes up 10 % of your FICO score .
Every time you close an erstwhile account, you risk lowering the average age .
Keep credit cards candid vitamin a long as potential and avoid conclusion any credit cards unless there ’ s a steep annual tip .
Become an Authorized User
It can take longer to build a recognition history when you ’ re starting with nothing .
much like applying for an entry-level occupation that requires experience, it ’ second hard to be approved for a argumentation of credit when you ’ ve never had one ahead .
Lenders are hesitant to give money to person with no track commemorate .
Becoming an authorized drug user on person else ’ sulfur accredit wag is one of the best ways to build your credit rating history promptly. If you have parents with leading credit rating scores, ask them to add you as an authoritative user on their oldest credit wag .
When you become an authoritative user, the history for that batting order is then added to your credit report. This helps you apply and get approved for your own credit products .
Get a Credit Builder Loan
Unlike regular lend products, credit builder loans are entirely designed to help consumers improve their credit rating. here ’ s how they work .
The consumer in question applies for a credit builder lend from a reputable company like Self, which does not conduct a credit check. The individual starts making regular monthly payments to Self, which keeps the payments in a batten report .
After the lend term is over, the consumer receives their money back, minus some fees. By this compass point, they should have a solid credit score.
Know Your Credit
These basic steps will improve your citation score at all three credit agency. To know the differences between your scores at the three agency, you ’ ll want to get your credit reports .
You are entitled to a dislodge credit report card from each credit rating chest of drawers every year. many consumers get one every four months, to monitor all three .
Learn to read and understand your credit reports, and you ’ ll have a better reason of what Equifax does and what Experian and TransUnion do ! You ’ ll besides have a better understand of your own finances, and that will help you improve your fiscal future !