FICO vs. Experian vs. Equifax: What’s the difference?

FICO and Experian and Equifax: Overview

The three major credit bureaus compile information about consumers’ borrowing habits and use that information to create detailed credit reports for lenders. Another organization, Fair Isaac Corporation (FICO), has developed a proprietary algorithm that can score the credit of borrowers from 300 to 850. Some lenders make credit decisions strictly based on the borrower’s FICO score, while others check the data contained in one or more credit bureau reports of the borrower.

When seeking a loan, it is helpful for borrowers to understand their FICO score and their credit bureau reports (such as those from Experian, Equifax, and TransUnion). Borrowers who appear to be stronger under a particular scoring or reporting model should look for lenders who use that model. Given the critical role that good credit scores and credit reports play in securing loans, one of the best credit monitoring services may be a worthwhile investment to ensure that this information remains safe.

Key points

  • FICO, Experian, and Equifax all compile and provide information about personal credit habits for lenders.
  • FICO just provides a digital credit score based on an individual’s payment habits and the amount of debt they have undertaken.
  • Credit bureaus Experian and Equifax also provide scores, but they also provide detailed credit history for individuals.


Fair, Isaac and Company (renamed Fair Isaac Corporation in 2003) developed the FICO score in 1989 by creating a tightly protected mathematical formula that takes into account the various information contained in consumer credit bureau reports. The company did not disclose the exact scoring model it uses, but its website does indicate how the scores are weighted.

Payment history or how often the borrower pays bills on time is the most important factor, accounting for 35% of the borrower’s score. Arrears, which is the ratio of the borrower’s outstanding debt to its credit limit, account for the other 30%. The length of the credit history is 15% of the borrower’s score; experienced customers will increase the FICO score. The credit portfolio accounts for 10%, and FICO rewards borrowers who prove that they can manage various types of debt, such as mortgages, auto loans, and revolving debt. New credit also accounts for 10%; FICO looks down on borrowers who have recently opened multiple credit accounts.

Obtaining a high FICO score requires a mixed credit account and maintaining a good payment record. Borrowers should also exercise restraint and keep credit card balances well below the limit. Credit card maxed out, late payments, and random application for new credits are all things that reduce FICO scores.

Compared with any other scoring or reporting model, more banks and lenders use FICO to make credit decisions. Although borrowers can explain negative items in their credit reports, the fact remains that low FICO scores are a deal breaker for many lenders. Many lenders, especially those in the mortgage industry, maintain strict FICO minimum requirements for approval. A point below this threshold will result in rejection. Therefore, there is a strong argument that borrowers should give priority to FICO when trying to establish or improve credit.

The biggest disadvantage of FICO is that it has no room for discretion. If the borrower applies for a loan that requires at least 660 FICO to be approved, and their score is 659, then they will be denied the loan regardless of the reason for their score. This may not mean that the particular loan sought lacks credibility, but unfortunately, the FICO scoring model is not subjective.

Borrowers with low FICO scores and high-quality information in their credit reports should seek lenders who take a more comprehensive approach to making credit decisions.

In the digital scoring model, FICO’s main competitor is VantageScore, which was developed in 2006 as a joint venture of major credit bureaus-Experian, Equifax, and TransUnion.


Experian is one of the three major credit bureaus and provides reports detailing consumer borrowing habits. Creditors such as mortgage companies, auto finance companies, and credit card companies report to Experian and its peers Equifax and TransUnion (TRU) on the borrower’s outstanding debt and payment history. Each bureau organizes this information into reports, subdividing which accounts are in good standing, which accounts are not in good standing, and which accounts are in collections and public records, such as bankruptcies and liens.

Experian’s advantage over FICO is that it provides more comprehensive information than simple numbers. A pair of borrowers may have a FICO score of 700, but their credit history is quite different. By viewing the Experian credit report, the lender can view the actual credit history of each borrower (every debt that the person has owed for ten years or more) and analyze how the person manages the debt. FICO’s algorithm may give ideal borrowers the same FICO score as those with high credit risk.

The main disadvantage of Experian is that, unlike FICO, it is rarely used as an independent tool for making credit decisions. Even lenders who scrutinize credit reports in detail instead of scoring the borrower’s numbers will usually look at the results of all three agencies, not just Experian.

Therefore, the borrower should check all three credit reports regularly to watch out for erroneous or derogatory information.

Although Experian provides free FICO scores on its website, you cannot get a free FICO credit score directly through Equifax or TransUnion.


Like Experian, Equifax is a major credit reporting agency. The credit report it generates is similar to Experian’s credit report and follows a similar format. Equifax reports are detailed and easy to read. If a borrower who delayed payment of credit card bills five years ago applied for a loan, the lender can determine the exact month of the delayed payment by checking his or her Equifax report. The report also pointed out debts held by collection agencies and liens on borrowers’ assets.

Equifax offers digital credit scores ranging from 280 to 850. The bureau uses similar standards as FICO to calculate these scores, but like Experian, the exact formula is different. However, a higher Equifax credit score usually indicates a higher FICO score.

The advantages of Equifax are similar to Experian. The bureau’s report is very detailed and provides lenders with more in-depth information on consumer borrowing habits than just numbers. Its disadvantages are the same. Borrowers cannot safely measure their chances of obtaining loan approval just by viewing their Equifax report. However, if their Equifax report is much stronger than their Experian report or FICO score, then they will be able to search for lenders that prioritize Equifax.


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