Why Credit Scores Are Different

Credit score Q&A: “Why credit scores are different?”

In case you didn’t know, there are three 3 major credit bureaus, including Equifax, Experian, and TransUnion.

And if you order a credit report that gives you all three credit scores (which is recommended), they most likely will not match.

For example, you may see something such as the following:

Equifax: 740
Experian: 720
TransUnion: 760

So you may be wondering why there are three credit scores, and why the credit scores differ.

Well, these three private companies dominate the credit scoring realm, and are utilized by various banks and lenders to determine your creditworthiness.

However, some banks and creditors may only order credit scores from Equifax, while others only rely on scores from TransUnion. After all, it’s cheaper to order one credit score than all three.

In fact, many auto leasing companies only use one of the three major credit bureaus, but you won’t know which one they use until your credit score has been pulled. So you need to know where you stand with all three!

Others may take the mid-score of all three, a common practice employed by mortgage lenders to get a better overall view of your credit history. Mortgage lenders want to see everything, as they have more at stake than most other creditors, considering the size of the loan they’re extending.

Again, all three of your credit scores must be ship shape because the mid-score takes all of them into account.

Credit Scores are Different for Three Main Reasons

First, the credit bureaus mentioned above receive data from your creditors at different times of the month.

As a result, depending on what day you order a credit report, new data may only be recognized by one or two of the bureaus, not all three.

So a recent collection or charge-off may only show up at TransUnion and Equifax, weighing those scores down while the credit score at Experian remains elevated, that is, until the derogatory event is eventually reported there as well.

Secondly, not all creditors report all their data to the three credit bureaus – they may just send it to one or two. So some positive or negative data may never make its way to one or two of the credit bureaus, making that credit score slightly different than the others.

Additionally, credit inquiries may only register with one of the credit bureaus, as opposed to all three, because some lenders only use one bureau for their credit check.

And finally, the credit bureaus define consumer tradelines differently, meaning a charge card could be seen as a revolving credit card, and so forth.

As a result, credit scores may vary slightly, even if the same data is reported. Remember, they are different companies, so data will be interpreted and delivered differently.

This explains why there is so much variation in your Fico score from bureau to bureau, which is why newcomer VantageScore is working to better align the data.

Most creditors rely on Fico score for their credit scores, but VantageScore is beginning to grab market share slowly but surely.

As you can see, knowing all three is much more important than knowing just one of your credit scores.

Unless you have all three, you simply aren’t getting the complete picture, and could be missing something significant!

Published by

Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals improve their credit scores and get the most out of their credit cards.

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