You are now probably wondering why your TransUnion credit score and FICO score are different. The same question has been asked by many other people. The simple answer is because they are two different scoring systems. Well, before you use your credit report, it is a wise idea to understand better about the differences between TransUnion vs FICO. Continue reading below!
Understanding the Differences
To put you into perspective, you need to know that TransUnion is a credit reporting agency a.k.a. credit bureau. TransUnion is one of the three biggest credit bureaus in the United States. The job of a credit bureau is to maintain your credit history file. (Read also : TransUnion vs Experian)
On the other hand, FICO is the creator and owner of the most commonly used credit scoring model. The FICO score has become a fixture for consumer lending across the United States. The FICO scoring model has been lease-used to various vendors in the finance sector. There are actually several different FICO models that have been specially tailored for specific creditor needs and emphasis.
When you apply for credit, the potential lender will pull your credit report from one, two, or all the three credit bureaus. Then, they will run the information through their preferred model to generate a credit score. Afterward, they will use the credit score along with other factors such as your income and historical information to decide on whether to offer the loan or not.
The credit score provided by TransUnion is not the same as the actual FICO score. TransUnion has its own algorithms to produce its credit score. However, TransUnion’s credit score usually correlates with the actual FICO score. In other words, if you get a bad credit score from TransUnion, chances are your actual FICO score is also bad.
A non-FICO score like the TransUnion’s TransRisk New Account Score is often called an “educational” or FAKO score. This score can be used to estimate the quality of your actual FICO score.
Which Credit Score is Actually Used?
So, TransUnion and FICO scores are different. But which credit score is actually used by the lender to make the decision? The answer is FICO. The actual FICO score is the most widely used by lenders and creditors to make decisions. Meanwhile, the TransUnion credit score is usually used only for additional consideration, or not used at all. Lenders and creditors, however, usually use TransUnion reports to see credit histories.
Nevertheless, TransUnion actually can give you an actual FICO score. In fact, TransUnion supports all of the different versions of FICO and VantageScore models. You just need to ask for a specific FICO scoring model if you want to receive your credit report with an actual FICO score.
|- One of the three biggest credit bureaus that maintain your credit history file||- The creator and owner of the most widely used credit scoring system|
|- The non-FICO TransUnion score is rarely used for credit decisions||- The actual FICO score is the fixture for most credit decisions|
|- Supports various FICO and VantageScore models||- Has several versions with different emphasis|
Before applying for a loan, you have to check your actual FICO score. That’s the best way to know what the lenders will base their terms on. You may also need to check your actual FICO scores from all the three credit bureaus because they often have slightly different numbers due to using different algorithms. Meanwhile, a non-FICO TransUnion credit score is rarely used for decisions; you can use it only to estimate your actual FICO score.