Experian vs. TransUnion vs. Equifax: What’s the Difference?

Experian

        There are a few differences in the way Experian reports data versus the way the other two agencies report data. For example, people who pay their rent on time will have the payments reflected on their Experian credit report. But with the other two credit bureaus, these payments won’t be on their reports. The only data regarding rent payments that will show up is negative rent data, which is data that reflects missed rent payments. Of course, the property management company has to report the rent data for it to show up on any of them. If you signed a lease with an obligation to make monthly payments for a specified period of time, then it will most likely show up on Experian. Experian credit reports also contain details about each transferred or closed account that you’ve had. These details include the month and year that these accounts will be taken off the credit report. In other credit reports, the only date listed for closed accounts is the last reported status date on the account. To figure out when the closed account gets taken off the credit report, you need to add 10 years to its last reported status date. Experian saves you the trouble of having to add 10 years to figure this out.  

TransUnion

        TransUnion provides credit reports that offer more details about employment than any other credit bureau’s credit report. The other two credit reports will just list the name of the applicant’s employer and nothing else. The TransUnion credit report will contain their employer’s name, position currently held and date they were hired. This information is important because it shows lenders how long the applicant has been with their current employer. If you were to try and obtain a mortgage to purchase a house, the mortgage company is going to check the TransUnion credit report to see if you’ve worked at the same company for at least two years. They won’t get this information from Equifax or Experian credit reports because the date you were hired is not on those.  

Equifax

        An Equifax credit report lists closed and open accounts separately from each other. As for the other two credit reporting agencies, they put all of the accounts together in alphabetical order. People who are unsure of their financial situation will want to have an Equifax credit report, so they can clearly see which accounts are open and which accounts are closed. This will help them determine their total debt by examining all of the open accounts together. The details of closed accounts can also be seen, such as why the account was closed in the first place. This helps lenders understand the outcome of the applicant’s past loans and debt obligations.

What is identity protection and Credit Monitoring Services?

 Identity protection is a term that refers to any security measure which helps prevent your personal information, such as social security numbers and credit card numbers, from being seen by unauthorized third parties. If the wrong people were to get your personal information then they could steal your identity and incur a lot of debt in your name that you will be responsible for. But when you take measures to protect your identity, you are preventing someone from doing this.

       

Identity Protection Online

Identity protection is most commonly associated with ecommerce and digital transactions over the internet. Any time you make a purchase online through a secure website, the personal and financial information you entered becomes encrypted as it is being processed through the server. The encryption will prevent any hackers or outside intruders from seeing this sensitive information. Modern day browsers let users know when they are on an encrypted page because a green padlock icon will appear on the top. This indicates 256-bit encryption, which is the most powerful encryption available on the internet.

Take Precautions

        Identity protection doesn’t always refer to security technology. It can also mean the simple measures that one takes to protect their own identity. This includes using your credit card only with merchants that you trust. It could also mean shredding all of your bank statements or other sensitive information that you no longer need anymore. Some identity thieves actually like to go through people’s garbage to steal their information. So a good investment into identity protection would be a paper shredder. Get creative and take personal measures like these to ensure your identity is protected.

Credit Monitoring Services

Credit monitoring services are usually offered by credit bureaus or credit management platforms, such as CREDITCHECKTOTAL.com. These services will keep track of your credit report every day and notify you if there is a significant change on the report. This change could be an updated credit score, an added debt account, or a judgment filed against you. If your identity were stolen then the first thing a thief would do is use your identity to take out credit cards or loans in your name. It is best to find this out as soon as possible so you can notify your bank and the credit bureaus that your identity was stolen. Otherwise, you will find out the hard way when the debt collector calls you or knocks on your door. By then, it will be too late because the debt owed will be enormous and you will likely be required to pay it all back. That is why credit monitoring services are so important. They will let you know whenever a new debt account is taken out in your name. If you didn’t authorize it then you know your identity was stolen.

Credit Monitoring Notifications

        When you sign up for a credit monitoring service through Experian, Equifax, CREDITCHECKTOTAL.com or any of the other credit management platforms, you will be given a choice as to how you want to receive your notifications. You can have the alerts sent to your email address or as a text message to your Smartphone. Choose the notification method that you check the most, which would likely be a text message because it will come right to your mobile phone wherever you are.

How late payments affect your credit report

Whenever you make a late payment on one of your current liens or debts, such as a credit card, it will have negative effects on your credit report card. Banks and lenders are very strict on the payment history of an applicant who is requesting a new loan. If the credit report even shows one month on a debt account that had a late payment, it will immediately be a red flag to them. A history of late payments shows lenders that you are a credit risk, which means they will be nervous about issuing you another loan or credit card. But if you have a history of on-time payments, they will likely grant you a new loan.

Credit Bureaus

        Lenders typically give debtors some leeway when it comes to late payments. For example, if you are two days late paying your mortgage premium then it likely won’t get reported to any of the three credit bureaus. Your lender will just charge you a late fee and add that to the premium. However, if your payment ends up being more than 30 days late, this is when lenders tend to get nervous. At this point they will notify the three credit bureaus, Experian, Equifax, and TransUnion, about the late payments. Once they are notified, the late payments will show up on your credit report for future lenders to see. This late payment history will stay on your report for up to seven years, which means it will be hard to get another loan during that time.

Credit Score

        When late payments are reported to the three credit bureaus you can be sure that your credit score will decrease. The payment history on a credit report affects 35% of your total credit score. All it takes is one reported late payment and your credit score could drop up to 35%. Of course, there are other variables that determine the percentage in which your credit score drops. It can depend on how late you were with the payment, what your credit score is and if you have a history of making late payments. So if you have a low credit score with a long history of late payments, then you might get the full 35% drop in your credit score. On the other hand, if you only had one late payment with a high credit score then you may see less than 10% in the drop.

Collections

        The worst thing that can happen is the lender sends your debt account to a collection agency. If you have a dangerous habit of making late payments that are well beyond the 30 day threshold, your lender may not be so patient anymore. They may just determine that your account is delinquent and then send it off to a collection agency for them to recover the debt. Even if you don’t have much debt on the account, a delinquency will surely cause more damage to your credit report than a few minor late payments. So if you have to be late with your payments then try not to be too late or else you might not get another chance to pay it again. The amount of days you can be late varies between lenders. Some lenders won’t take action with a collection agency unless you are 120 days late. But if you are frequently late beyond 30 days then they may do it anyways.

Answers to a Few Frequently Asked Credit Score Questions

Surprise! Credit scores are calculated differently depending on the methodology used and the credit bureau compiling the report. Learn what the differences are and take control  of your own financial responsibility.

By taking the time to understand how credit functions and how your credit score is calculated, you will not only gain invaluable information, but be able to take actions to improve your scores.

Through financial literacy, you will achieve more control over your financial security.

Are All Scores The Same?

No. Not necessarily.

FICO scores are the most common, with 90 percent of top lenders using the credit scores provided by Fair Isaac Corporation. Not all credit scores are FICO scores, though.

Because of FICO scores’ majority role, most information available relates directly to FICO scores for simplicity and practicality. That being said, it is important to be aware that there is always a slight possibility one or more of your credit scores is not a FICO score.

Your credit report should list if the score is a FICO score or not. If it is not explicit, you can always contact the agency to find out.

Furthermore, because the credit bureaus each calculate scores differently, a FICO score from one agency may differ from the FICO score from another agency. In other words, there can even be different versions of FICO scores.

One note: VantageScores is an alternative to FICO scoring and has gained popularity recently. Like FICO scores, it uses analytics to create a composite image of borrowers’ financial responsibility and reliability.

How Many Different Credit Bureaus Are There?

Three to be exact: Equifax, TransUnion and Experian.

For each of these three national credit bureaus, you have a separate FICO score.

While each of the bureaus compile essentially the same types of data, your FICO score could be different for each bureau.

What’s On A Credit Report?

Your credit report shows a lot more than just a single credit score.

• Identifying Information: Such as your name, current and previous addresses, SS#, dob and employment information

• Credit Accounts: Like credit  cards, auto loans, mortgages, etc.

• Credit Inquiries: When someone requests information regarding your credit history, those requests appear in this section

• Public Records: Legal documents from state and county courts can be collected by credit reporting agencies. These documents can be records of bankruptcy, foreclosures, suits, liens, wage attachments, etc.

• Collections: If you have any overdue debt from collection agencies, that information is also included

How Is My Credit Score Calculated?

Broadly speaking, FICO Scores are a composite of:

• 35% Payment History
• 30% Amounts Owed
• 15% Length of Credit History
• 10% Types of Credit
• 10% New Credit

You can tell the importance by the weight of each category, so if you are trying to improve your FICO score, look at amounts owed and payment history to begin with. Keep in mind, however, that even the categories with lower percentages can be influential. So, don’t overlook these areas simply because they do not carry more weight.

Note what the FICO score ignores:

• Race, ethnicity, religion, national origin, sex, marital status
• Age
• Salary, occupation, position, employer, employment history
• Location
• Interest rate changes
• Family support obligations, including child support and alimony (however, missed child support does stay on your report; the obligation itself to pay is not documented unless you fail to pay on time)
• Certain credit inquiries: employer, administrative, pre-approval, promotional or self/consumer-initiated inquiries

In other words, your identifying information and anything not found on your credit report does not influence the score.

Credit Scores Can Be Different Between Bureaus?

It is important to remember that while credit scores from different bureaus can vary, they should be relatively close if all of your collected information is identical.

It can happen, however, that the information compiled by Equifax, TransUnion and Experian is not all the same.

Each bureau uses particular methodology to optimize the predictive value of your credit history. In other words, the formulas for calculating credit  scores are in place to determine as accurately as possible how you will act and react financially in the future.

REMEMBER: Credit scores are a snapshot of your history used to paint your future financial portrait.

Why Wouldn’t Bureaus Have Identical Information On Me?

The most common reason would be that the collection processes are not the same.

Not all creditors/lenders are required to report. Because of this, your credit report may not reflect every line of credit you have.

For instance, some national department store/bank credit cards may not appear on your report – because it may not be required of that particular creditor, they may opt out of voluntary reporting.

If you find out that certain lines of credit are not on your report, you can always ask your creditors to report your accounts. They may not oblige, but it never hurts to ask. This can be especially helpful if you have been told by lenders that you have insufficient or no credit, but you do hold lines of credit; this can be an easy step to begin building that history.

Besides Different Information Collected By The Bureaus, Why Else Would My Scores Be Different?

• Timing: If your credit scores are not compiled at the same time, the data may have significantly changed – especially if you are just starting to build history and the length and breadth of your credit history is small.

• Names: Particularly relevant if you have had a surname change (through marriage or divorce, most commonly), but if you applied for a line of credit under a nickname or truncation of your legal name, that can cause fragmentation or incomplete files on the credit reporting agencies.

• Inaccurate/Incomplete Information: If addresses change or social security numbers are mis typed, information can also be divided and not compiled wholly.

Remember, your credit score is an indicator of your financial habits; it illustrates your level of responsibility and can be used to predict how you will handle finances in the future. When used as a tool to build your financial reputation, credit accounts can be have unparalleled benefits.

When used correctly, credit can be a saving grace and not a death sentence to your financial stability.
Educate yourself today and take control of your financial reputation.

How To Build Credit Using Credit Cards

In debt? Closing an extra credit card might sound like a savvy financial solution, but for your credit score, that may not be true.

Even if you are not in debt, think twice before taking scissors to the plastic.

Credit cards are one of the most misunderstood forms of building a healthy credit history. Often assumed to be – and used as – a source of emergency income, credit card misuse is a common occurrence.

However, digging into what credit is, how it works and where credit cards come to play within the larger picture can help those little pieces of plastic work for you, instead of undoing your financial stability.

Understanding The Function Of Credit

Credit cards are much more than a way to purchase something when your pocketbooks are looking thin. In fact, when the bank account shows a low balance, turning to credit cards could be a red flag of poor financial habits and money mismanagement.

When used responsibly, however, credit cards are one of the easiest and most effective ways to build credit.

Particularly in this day and age, having a robust credit history is a must. While some can do without, and some preach the credit card free life, extensive, healthy credit can expand the limits of your purchases and even employment options.

Having credit is all but essential for making large purchases such as cars and homes. Furthermore, credit is also necessary for long-term contracts like renting or employment. Regarding employment, while it is advised against for employers to deny someone a position based solely on credit, it is not illegal.

Even if the purchaser was able to pay for these expenses without having a line of credit, if a cash or check purchase is not a current option, the purchase could be denied. Despite proof that income and cash flow exceed the cost of the purchase, a lack of credit history can be grounds to not sell or extend employment.

Why? Because credit scores indicate to the seller or employer that the purchaser has a history of being financially responsible.

How Credit Cards Build, Or Burn, Credit

Holding a credit card is not a free pass to free money. It’s opening a line of credit.

When understood for what it is and maintaining the attitude that the card is your ticket to building a record of responsibility, mishandling can be easily avoidable.

The simplest way to keep credit card use in check is to never spend more on the card than you could in cash, followed closely by the next important step of paying off the balance quickly.

When credit card use is seen as an alternative to cash you already have — just a different form of payment — crippling, debt-forming habits can be sidestepped.

That being said, debt happens. Mismanagement happens. Emergencies arise where payments using a credit card are the only way to stay afloat. Don’t go rushing to cancel all cards if this happens. Don’t forget that the poison can be the remedy with proper guidance. The same thing that got you into trouble, when used correctly, can redeem your credit.

Ways To Boost Your Score

1. Use the card(s) frequently
2. Don’t exceed 30 percent of your maximum credit amount
3. Make payments regularly
4. Make full payments
5. Consider the advantage of multiple credit cards

Frequent Use

Creditors, lenders and people extending contracts all look at credit reports to get a clearer picture of who you are. They are all searching for specific indicators of responsible money management.

By demonstrating financial responsibility, you convey a well-rounded persona — marking yourself as someone who can be trusted with significant responsibilities over a long period of time.  

One key indicator of your credit report is how frequently you use your line(s) of credit. Simply holding an account does not demonstrate to creditors your spending habits; use of the card(s) is essential. Extremely sporadic use does little good to keep those reports in ideal shape.

Frequent use, coupled with regular payments, shows that you know how credit functions and are not using it to purchase things outside of your budget.

Infrequent use, even if the balance is paid in full after a brief time, does not show the same level of responsibility. A single instance or two does not indicate a reliable habit — the habit is what people are looking for when they access your credit report.

The 30 Percent Guideline

Similarly to frequent use, the amount of credit used sends a clear message over time about spending habits.

In order to boost your credit most significantly, financial advisors suggest implementing a 30 percent rule, where the credit holder does not use more than 30 percent of their available credit.

Again, over months, this habit begins to form a pattern that in turn forms a picture of “typical use.” The longer your typical use remains constant and demonstrates responsible credit, the better your credit report will look to others.

Staying below your credit limit — significantly below — reinforces that the card is a vehicle of financing and not a way to squeeze in a few more purchases that are unaffordable within your budget.

Regular, Full Payments

Think of making payments as a way to check in with your credit company.

Not only do credit cards come with set due dates that are highly encouraged — and often reinforced with late fees, but on-time payments display awareness on your part of deadlines, basic contractual agreements and following through on promises.

Yet again, by repetitively doing the same thing over a length of time, you create a paper trail of habits that lenders, creditors and contractors love to see.

Furthermore, even a single late payment can put a dent into your credit score. In order to avoid this damage, make a habit of paying at least the minimum amount every month.

In order to have the best score you can, do not carry a balance from month to month to month, only ever paying the minimum required. Pay off the balance as quickly as possible. This strategy should not be difficult if you do not use your credit card to finance things you cannot really afford.

One Card, Two Cards, Many Or Few Cards

Having more than one line of credit can be beneficial — if used correctly. However, multiplying your cards multiplies the responsibility.

Holding multiple cards and paying on them regularly demonstrates the ability to manage multiple lines of credit without drowning in one debt by compensating through another. Having more than one card and handling each of them equally well can further bolster your image as a responsible adult. Above all, when someone accesses your credit report, they are looking to see if you can demonstrate responsibility.  

Demonstrate that you have the capability of managing debt without being controlled by it.

Again, by properly handling multiple lines of credit at once, frequently keeping minimal balances and paying off monthly, more than one card can be advantageous to your credit score, and thus your relationship with creditors, lenders and contractors.

The Bottom Line

Credit cards are tools that build your reputation as a financially responsible adult. With the right intentions and proper use, they can build and rebuild security. Used otherwise, they can spell financial trouble.

Holding multiple lines of credit can be beneficial if you act proactively and ensure to pay off the balances on a monthly basis and do not max out the credit limit; staying at or below 30 percent has been shown to send the clearest message to lenders that you are financially responsible and accountable for your spending habits.

However, multiple lines of credit may carry too high of a risk if they are used as “free cash” to finance items your bank account cannot handle, which can lead to large debt problems and a murky credit history. To avoid falling into the frequent trap of using plastic in a pinch, change your mindset to view credit cards as an extension of check and debit cards, and only spend what your bank account can handle.

With proper control, holding credit can be an unparalleled financial benefit.
As with any contract or financial decision, think before you sign. Understand what you are getting yourself into by opening additional lines of credit or holding lines of credit that are not helping to build your security. Don’t be caught unprepared. Take control of your financial health today.

Why You Shouldn't Neglect Your Credit Score

With all the things you have to be concerned about in life, you’d think by the time you hit your 50s or 60s, you could stop worrying about having a good credit score.

You may have bought and sold homes, paid off credit cards, successfully negotiated lease agreements, and paid off brand new cars in your day. You are a good credit risk — heck, I’d loan money to you. So why should you care about your credit score at this stage of the game?

You might not even have plans to move and apply for a new mortgage. You might intend to drive your car for 250,000 miles, or until your wheels make their last turn.

But sometimes life has other plans for us.

Benjamin Franklin once said, “The only two certainties in life are death and taxes.” I would add “change when you least expect it” to his list.

A change may involve taking out a loan or some other kind of credit check, so you need to be vigilant about keeping a very good or excellent score. According to BANCO FINANCIAL a “good” score is generally 720 or higher.

Here are some times a great credit history and score could come in handy as you approach your golden years:

WAYS TO BOOST YOUR CREDIT!!!

Pay attention to when balances are paid off

Many people assume that when they pay off their balance on a credit card, that fact shows up right away in their credit score. But most credit card companies report customer balances to the three major credit bureaus at the beginning of each month, and it can take 30 to 60 days for your credit score to reflect that. Use this knowledge before deciding when to apply for a mortgage or personal loan. A higher credit score can help you win better terms on a loan.

Look into credit repair, but carefully

Using the right credit repair expert can help you see improvements in your credit score. There are complex laws involving creditors, credit bureaus, collections companies, judgments, tax debt and more. A seasoned expert can help you navigate this confusing maze, and you may be able to see a boost in your credit score of 10 to 200 points in just months.

The key is to choose a reputable company, and to make sure they review your credit before taking you on. Without a full credit analysis, there is really no way of knowing whether a credit profile can be improved. To allow a prospective client to sign up for credit repair services without a thorough credit analysis would be unethical.

Ways to boost your credit score

Focus on your score — not your income

As a credit expert, I encounter hundreds of high-net-worth individuals who assume they have a great credit score because of their wealth. But your income has nothing to do with your credit score. If you have $7 million in the bank but are late on your credit card payments, your credit score will still be poor. Missing a payment will affect anyone’s credit score. So make all payments on time, no matter what.

Keep a good balance-to-credit-limit ratio

When you want your credit scores to be as high as possible — for example, when you are applying for a mortgage — keep your outstanding balance on each card below 10% of the credit limit for a few months prior. So, if your credit card has a charge limit of $1,500, keep your outstanding balance below $150. It’s also helpful to have a limited number of credit cards with outstanding balances. Do not close credit cards; just pay off the balances.

Become an authorized user

If done correctly, being added as an authorized user on someone else’s older credit card account can boost your credit score. Since the average age of credit accounts has an impact on scores, being placed on an old card can age your credit and add points. But you have to be careful. The individual should have a strong payment history and low credit card balances.

In addition, some card issuers reward cardholders with extra cash, points or miles for adding an authorized user.

SEVEN WAYS TO RAISE YOUR CREDIT SCORE

SevenWays to Raise Your Credit Score

1. Pay Bills before Payment Date
2. Make Multiple Payments
3. Ask for a "Good-Will Deletion"
4. Pay for Removal
5. Protect Yourself in a Short Sale
6. Purchase Seasoned Tradelines
7. Call BANCO Capital Corporation 1-800-442-1591
Check us out on the website @ http://www.bancoservices.com