Is Experian or FICO more accurate?

Posted on: 29 Jul 2024

If you have heard about credit scores, then Experian and FICO are two companies whose names you are likely to have come across. However, which of them returns the correct credit score? Much controversy exists regarding this issue, which is why we should look at it in detail.

Experian: What is Experian?

Three main credit bureaus collecting and offering credit score data are Experian, TransUnion, and Equifax. These credit bureaus then compile data on consumer borrowing and loan records of repayment, which are then presented in a credit report. It's important to remember that the credit bureaus let the banks and other loan companies you apply to access your information.

Another organization is FICO, which creates credit scoring algorithms based on credit report data that figure your three-digit credit score. Furthermore noteworthy is the fact that most lenders employ the credit score model known as the FICO Score. The score tells the lenders your expected level of risk as a borrower. Available credit scores range from 300 to 850; the danger decreases with increasing scores.

The one aspect to keep in mind is that FICO created your credit score using credit bureau data. Experian provides the credit data; FICO examines the data to get the score.

Is FICO or credit karma score more accurate?

It is imperative to note that there is no difference in terms of accuracy in Experian or FICO scores. Here's why:

Credit Information Gathering Institutions: Experian, Equifax, and TransUnion; gather similar data on your credit status over time. This includes things like timely payment on loans, amounts owed on credit cards and lines of credit, the proportion of credit card accounts to total accounts, new credit inquiries, and others. However, the specific details that pertain to one’s credit accounts may slightly vary from one bureau to the other because not all reporting account activity is to the three bureaus.

Regarding FICO, your scores are computed by the scoring models using the data given by the credit bureaus. It is, therefore, possible to find that your FICO Score differs from one bureau to another, depending on the variances in the base information. However, FICO has created its scoring in a way that such differences do not affect those scores greatly.

This is why it is not unusual for your FICO score to be somewhat different at the three credit bureaus, even though they are based on the same formula. However, no one score is more accurate as all the credit scores are based on your real credit data.

For all the above-mentioned scoring models, the FICO score is considered to be standard in the industry. The majority of lenders look at FICO Scores provided by one or more credit bureaus, not scores produced by the credit bureaus themselves. Over 90% of credit decisions are made on FICO scores making them the gold standard for precision and reliability.

There are some differences between the credit scores provided by the three credit bureaus including Experian, Equifax, and TransUnion.

While your scores don't differ hugely across bureaus, it's common for consumers to have small variations:

Some consumers have found that their Equifax FICO Score is higher than their Experian FICO Score by up to 10-30 points.
The accounts reported by TransUnion may not be the same as the ones reported by Equifax, Experian, or any other credit reporting agency. For example, an account that has just been opened for a credit card might appear at one bureau several weeks before it appears at the others.
One bureau can have wrong account information that reduces your score, but your scores will remain unaffected in the other two bure Equifax, Experian, and TransUnion are the three credit bureaus in the United States Equifax, Experian, and TransUnion are the three credit reporting agencies in the United States.

These differences occur, but they do not necessarily offset scores by more than 30-40 points maximum. Neither of these small discrepancies would mean that anyone will improve their score or increase their accuracy. They use the FICO scoring model and their scores are compatible despite coming from different bureaus.

When you go out to apply for new credit, most lenders perform what is known as a ‘Triple Credit Pull’. This is where they get your FICO Scores, as well as your credit reports from Equifax, Experian, and TransUnion. Yes, this means that little variations in your scores will not be the determining factor whether or not you get a credit application.

How do you obtain your Experian and FICO credit scores

You can access your FICO Scores and the credit reports they are based on from Experian and the other bureaus using free or paid services:

Free services – Unlike the credit scores which you have to pay for like the FICO score, there are websites such as Credit Karma that offer free access to the VantageScore credit scores provided by Equifax and TransUnion. However, they are not your actual FICO Scores that most creditors effectively use in evaluating your creditworthiness.
Credit checks by credit bureaus - The three major credit bureaus offer to sell Fico scores and complete credit reports to the intended customer on a monthly or annual basis. This provides you with your authentic, lender-authorized scores.
Credit monitoring services – Getting enrolled with triple bureaus means receiving unlimited online access for identity theft protection and score tracking to Experian, Equifax, and TransUnion FICO Scores and credit reports at a monthly fee.

The bottom line

You might not have the exact scores with the three credit bureaus, but no bureau is more accurate than the other. FICO Scores are still being used in the industry as benchmarks for lenders while Experian, Equifax, and TransUnion supply the raw credit data that goes into making your scores. So, reviewing the credit reports and several FICO Scores across the bureaus determines the overall state of credit health. However, the differences in scores of the bureau will not be the decisive factor in the approval of a loan.