Why is my credit score different between Experian and Equifax?

Hold on, my credit number is 850 with Experian but 550 with Equifax?! You may be wondering why are these two scores different, and why is one lower than the other? What have I done wrong? My personal information is accurate and up to date, I always meet my repayments and yet, the scores both appear to be different?

It’s completely reasonable to be asking these questions to yourself, and yes, we hear them ALL THE TIME. So you're not the only one! Stress no more - If you want to find out the reasons behind ‘why’ your credit number is different with various credit reporting bureaus, as well as factors that may affect your credit score and how to improve them, then you’re in the right place.

Continue reading to find out more.

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Reason 1 - different scoring scales

Ultimately there are three different credit reporting bureaus in Australia: Experian, Equifax, and Illion (but in this article, we’ll only be focusing on Experian and Equifax - the two largest bureaus), and although each of them may work with different lenders (though there's a lot of overlap), these two credit bureaus still section off each individual's credit score into five bands as shown below:

Experian: The overall range is 0-1000 where:

0-549 is low,

550-624 is fair,

625-699 is average,

700-799 is very good, and

800-1000 is excellent.

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Equifax: The overall range is 0-1200 where:

0-459 is low,

460-660 is fair,

661-734 is average,

735-852 is very good, and

853-1200 is excellent.

From the score scales above, you might notice one of the possible answers to: why are my two scores different, and why is the Equifax score so much higher? Well, it could be because they have their own separate scoring system. The main difference is Experian grades it between 0 – 1000, while Equifax grades the score between 0 – 1200. This means that there is not only a clear 200 point difference between these two bureaus but the “perfect scores” are also different, which is 1000 as reported by Experian and 1200 as reported by Equifax.

Nevertheless, a good, very good or excellent score within their respective scales may mean lenders are more likely to approve your loan application than someone who has an average or below-average score.

In some cases, it may also impact:

1. How much they will lend you.
2. The interest rate they charge.
3. Other credit or loan terms.

Therefore, your credit score is crucial in determining if you are a creditworthy borrower.

Note: You're also legally entitled to a free credit report once a year from each of the bureaus - it's worth doing to get a full picture of your overall financial health.

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Reason 2 - different interpretations

While Experian provides monthly data for each account including the minimum payment due, payment amounts, and balances; Equifax, on the other hand, lists accounts in groupings of open or closed - making it simpler to view a summary of current versus old credit information. Which is why Experian has a slight edge over Equifax, as it tends to track recent credit searches more thoroughly.

For example, Experian includes the following information in a credit report:

• Personal information - any piece of information that can be used to identify you. For example, consumer credit enquiries, consumer serious credit infringements, file access record, even your past addresses.
• Public records like bankruptcies - five years from date of listing or two years after discharge, whichever is the greatest.
• Accounts - which include credit cards, loans, mortgages
• Recent inquiries - which include any creditors checking a report due to a recent

On the other hand, Equifax includes the following information in a credit report:

• Revolving accounts - which include credit cards and charge cards from department stores
• Mortgages
• Instalment loans - such as, car and personal loans
• Other accounts - which might include companies that are used to collect debts on behalf of creditors
• Consumer statements - which can be added to explain an item on a report
• Personal information - such as, address history
• Inquiries from potential creditors
• Public records like bankruptcy
• Collections - these are accounts that have been charged off and sent to collection agencies due to lack of payment

Additionally:

In adherence to the Credit Reporting Code, more companies in Australia use Equifax for credit reporting than use Experian. While this alone does not make Equifax better in defying comprehension, it does indicate that debt is more likely to appear on Equifax which, in turn, explains why it has an 85% share of the consumer credit reporting market and says it holds data on 19.4 million individuals (Andy, 2019). Thus, making it the largest credit reporting agency in Australia.

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Reason 3 - depends on which bureau(s) you’re with

It's important to note that not all credit providers report to both of these bureaus and even when they do, they might do so in different time frames. For example, one might look at the most recent, whereas another might look at weeks apart. Also, as mentioned earlier, it is possible to have a debt showing on one without it appearing on the other. For this reason, it is quite possible that each CRB will have data that is unique to them.

Similarities between these two CRBs

Despite the differences between the information provided by Experian and Equifax, they do share some similar attributes, including:

• Personal data - this includes name, birth date, address, and employer;
• Credit products you’ve applied for, the credit limit of each product, and account summaries of loans as reported by creditors;
• Public records - a list of any judgments against an individual, as well as bankruptcies;
• The types of credit providers that have made hard enquiries on your account;
• Any negative events, such as defaults; and
• Previous credit checks and credit inquiries from creditors, including a list of all credit applications that have been made by the borrower.
  

So, this means....

Long story short, having different scores and different information with different CRBs is perfectly ok, as long as the information provided in each credit report is accurate and contains no misleading information or unequivocal mistakes. For example, misspelt surnames, incorrect date of birth, home address, credit card details, and/or a home loan inquiry that the consumer never actually made.

As such, lenders, in most cases, are “front and centre” when it comes to assessing the creditworthiness of a loan applicant. What's more, credit reporting bureaus can and do make mistakes (but of course, you should not keep your hopes on this). As a result, they usually use both credit reporting agencies to get a full picture of a borrower's creditworthiness.

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This brings us to: What factors affect credit score in Australia

What makes your score better or worse is a combination of factors:

1. Length of your credit history in relation to the first time you apply for credit.
2. Your repayment history like your missing credit repayments, multiple loan applications, and failure to pay your bills promptly.
3. Forgetting to regularly update your contact details, duration of your employment at your current job, and residential address.
4. Number of and pattern of credit enquiries (i.e payday loan, revolving credit etc).
5. Negative events such as payment defaults, bankruptcies, and court judgments.
6. Frequent application for balance transfer and credit enquiries
7. Getting rejected for a loan or credit card too often
8. Not checking your credit report regularly and fixing errors
9. Making excessive hard enquiries
   

Understanding these 9 factors are important to maintaining the health of your credit score. So, our recommendation is: always make sure to be in control of your credit, not let it control you. After all, being able to know that you can utilise your credit to qualify for any item that is within your means is a great thing to have in your financial arsenal.

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Ways to bolster your credit score

Just like what Newton's third law says: for every action, there is an equal and opposite reaction, it's pretty much the same thing for credit score remedies. Each above mentioned factor that negatively impacts your score, can also play an equally important role in improving your credit score.  

How? Let’s say one of the factors is because you can’t pay your bills on time, then try not to repeat this again. Solution: use resources and tools available to you, such as automatic payments or calendar reminders to ensure you pay on time each month. If the reason is that you’re experiencing financial hardship, maybe due to COVID or other valid reasons, talk to your bank, search for COVID employment aids, or seek financial advice from reliable and credible sources. Try to not leave the situation unresolved to a point where it starts to harm your credit score.

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Learn the A-to-Z on how to you check, monitor, and  improve your credit score for free

By reading these articles where you’ll find answers to all of your credit-score related questions:

• How to check my credit score for free
• Can you consolidate your loan if you have bad credit
• What is the minimum credit score for home loans in Australia
• Credit score 101: do you know your credit score
  

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Thanks for reading this blog. If you find it helpful, please don’t forget to share it with your friends who might be having trouble understanding their scores. Got questions? Feel free to reach out to us anytime via our social media platforms: facebook, instagram, email, or twitter.

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WeMoney members can get a free rate quote and enjoy rates as low as low as 6.95% (6.95% Comparison Rate*) for excellent credit. If you are keen to explore, get your personalised quote now.

Listen to our Podcast

To learn more about credit scores, take a listen to Episode 3 of We Talk Cents. Your hosts Dan & Blaize dive into what a credit score is, why it’s important and what factors impact your score for better or for worse. To take a listen check out the link here.

Read our latest featured articles

WeMoney was recently featured in 6PR 882 News Talk, check out the full podcast on how you can revive your credit score here.

Outside resource

You’re also entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit bureaus in Australia, visit Moneysmart.gov.au for more information.

Monitor your credit score at a click with WeMoney app

Now if you want to find how you’re doing, jump onto the WeMoney app, have a look at the offers. That's the best bet since they use the Experian score, hopefully (I'm guessing) they'll recommend places that you'll qualify for. Fingers crossed, best of luck.

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Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.