Which credit agency, report, score, or app is most accurate? The answer depends on who is asking the question, and when.
Precision means one thing when a lender pulls a credit report or score in connection with a new account application. The agency that maximizes profitable accounts while minimizing losses is best. Lenders want reliable predictions of future behavior.
Exactness means something else to consumers. Sometimes it means which report is error-free. More frequently, they want to know which free service matches the closest to what lenders will eventually see. Borrowers want consistency.
Best Overall Credit Reporting Agency
We begin by asking which credit reporting company is best overall. Is it Experian, Equifax, or Transunion that comes out on top? The answer depends on your perspective. Lenders and consumers have vastly different definitions of quality.
We chose to define best (highest quality) as the credit bureau most closely meeting the standards of accuracy, the speed of updates, ease of dispute handling, and data security.
The credit bureau that provides the most accurate report is the one closest to being free from error or defect; consistent with a standard; or faithfully representing or describing the truth.
A common courtroom oath provides an outline for balancing precision.
- The truth – is the information displayed on the report free from error?
- The whole truth – does everything about a consumer appear in the report?
- Nothing but the truth – does every item on the report belong to that person?
Lenders and consumers view the accuracy and quality issue very differently.
- Lenders choose what bureau to use based primarily on the amount of negative information gathered and presented that could pertain to an applicant. Banks and lenders are predisposed to avoid large losses via default. This factor varies most by geography.
- Consumers view the accuracy issue differently. They want incorrect negative marks removed quickly (faster updates) through a convenient process (easiest disputes). Consumers are predisposed to avoid rejection.
The credit bureau that updates fastest has the most reliable information about consumers on its reports. Fresh data is a better representation of consumer behavior. Stale evidence hurts the predictive ability of the scores lenders use to make underwriting decisions.
Credit bureaus update information in cycles depending on the type and source of data.
- Soft and hard inquiries appear on file daily as they occur
- Payment history and balances refresh every 30 days in conjunction with lender billing cycles
- Public record files refresh as the county reports new cases
Each bureau receives the refreshes at the same time. However, each utilizes a different strategy to post the revisions to file. For example, Experian runs larger national files while Equifax runs smaller regional databases.
Easiest to Dispute
The credit bureau that is easiest to dispute could have factual data that is more beneficial to the consumer. Most people dispute negative information and leave the positive history alone.
On the other hand, the credit-reporting agency that is hardest to deal with could have facts that are more beneficial to lenders. As discussed earlier, lenders want to see negative marks to help them avoid losses.
The ideal dispute process balances the needs of consumer and lenders.
- Easy to contact and responsive to consumer inquiries
- Does not remove correct information challenged by individuals
- Promptly corrects errors once prompted with documentation
The credit bureau that properly safeguards the sensitive financial data of hundreds of millions of consumers is most secure. A data breach could expose the entire country to identity theft risks.
Equifax was hacked sometime during 2017. In September of that year, they announced that a security breach might have compromised the social security numbers, birth dates, and other personal information of about 143 million U.S. consumers.
Does this mean that Experian and TransUnion are better with their data security? We do not know. We simply know that the hackers penetrated the Equifax network first.
Ability to Mimic Future Lender Result
When consumers ask about the most accurate free credit reports and scores, they are asking a very different question. The issue is no longer about being free from error or defect; consistent with a standard, or faithfully representing or describing the truth.
Credit reports and scores always differ. People are asking how much they can rely on these zero-cost resources to preview what their lender will see when evaluating a future new account application.
The most reliable free credit report will match the source bureau and minimize the time between pulls. Each bureau collects, compiles, and communicates the information in unique ways. In addition, the intelligence is dynamic.
Lenders typically choose to pull a single credit report from one of the three main bureaus when evaluating a new account application. This means that any single free report has a one-in-three chance of matching the actual source ultimately used by the lender.
Time Between Pulls
Consumers frequently pull a copy of their free report in advance of applying for a new borrowing account. Meanwhile, the agencies are constantly updating the information behind the scenes.
- Shorter periods between the free and lender pull
- Fewer data changes
- The first report seems more precise
- Longer periods between the free and lender pull
- More facts changes
- The first report appears less precise
The most reliable free credit score matches the data source, modeling company, industry overlay, and version. Many consumers end up comparing apples to oranges because there are so many possible variations.
The primary factors determining your credit score are remarkably consistent across each of these minor variations. Our advice is to let it go.
- Data Source: All three bureau provide FICO and Vantage scores. Each of the three outputs a unique result for every individual
- Modeling Company: Two separate organizations develop the FICO and Vantage offerings
- Industry Overlay: Auto and mortgage lenders use rating systems tuned to their industry
- Model Version: Lenders do not always adopt the latest revision of an equation
Apps Simulators and Monitoring Precision
Apply the basics for breaking down the accuracy of credit bureaus, reports, and scores to the many apps, websites, estimators, simulators, and monitoring services. It all boils down to how well each online application mirrors what the lender uses in your next loan application.
Keep in mind that these web-based apps provide a valuable educational service. Start with reasonable expectations. The information and services are very similar to what a specific lender might ultimately utilize.
They just will not be exact – except in a small minority of cases.
CreditKarma.com is a free website app supported by advertisers and affiliate partners. They provide consumer reports from Equifax and TransUnion. The score is the Vantage version from these two bureaus.
The Credit Karma reports and scores are less precise when –
- The lender pulls an Experian report or rating (about 1/3 of the time)
- You wait a long time before applying for a new loan
- The lender uses FICO rather than Vantage (more than 2/3 of the time)
The Credit Karma score simulator relies on a TransUnion report and the Vantage 3.0 rating. The simulator does a good job of estimating the generalized impact of changes in consumer behavior. However, it is not exactly what lenders use most of the time.
The Credit Karma credit monitoring services scan both your TransUnion and Equifax reports. This means it will catch more than 2/3 of any possible errors and identity threats. It will miss any errors or threats unique to Experian.
Credit Sesame is a second free website app supported by affiliate partners. They make money by pre-qualifying members for various financing offers.
Credit Sesame bases all of the services on information from a single bureau – TransUnion. Therefore, each app will not match what a lender ultimately uses at least 2/3 of the time.
- The credit score is the Vantage 3.0 version. Most lenders use FICO.
- The credit monitoring service will miss errors and threats unique Experian and Equifax
Quizzle is a third free website app supported by advertisers and affiliate partners. Also, Quizzle bases all of its services (reports, scores, and monitoring) on information from TransUnion and the Vantage score.
Do you see a trend emerging? We do. There is no need to keep repeating the obvious.