Your credit score is one of the most important numbers you will ever deal with in your lifetime. It can determine whether or not you can buy a home, a car or even a cell phone. The issue is that understanding your credit score can be difficult. It’s even more confusing when the three major credit bureaus have different scores. Understanding the reasons for different scores can help give you some peace of mind.
Reasons for Credit Score Differences
There are three main credit bureaus that you need to be aware of. These are TransUnion, Equifax, and Experian. Each of these credit bureaus has its own way to score your credit.
1. The Date of the Score – Your credit score can change on a daily basis. That means if you check your credit score on Monday at one credit bureau and then wait until Friday to check it at another, you may see a different score. In fact, the data from Monday may already be outdated. That is why if you plan on checking your scores at all three bureaus you need to do so on the same day.
2. Different Information – The information each credit bureau has on file can be different. The reason for this is that not all creditors report to all three of the major bureaus. This means that one credit bureau may have information that helps or hurts your credit score while the other one or two bureaus do not have that information.
3. Calculating Methods – There are many different scoring models that can be used to determine your credit score. Each agency has its own models and even uses different models depending on what type of credit you may be applying for. For example, one type of model may be used when applying for a mortgage and a different type of model may be used when applying for a car loan. It comes down to the factors that each bureau and each creditor deem most important.
4. Information Errors – Another reason you could see credit score differences is that an agency might have an error in its records. It may show debt that you have paid off, it might not have removed a bankruptcy after the standard time period, or it could have added something to your report that isn’t even yours. That’s why it is a good idea to check your credit history from time to time for errors.
5. Names used to Apply for Credit – It is possible that you have applied for credit using different names. For example, you may have applied for a car loan under James Redmond and a home loan under Jim Redmond. Another example is someone using a married name versus a maiden name. This can lead to incomplete or fragmented files at one or all of the credit bureaus.
6. Type of Scores – Keep in mind that not all scores are FICO scores, so you don’t want to be comparing apples to oranges. The three major agencies also have their own scores. These can be different from your FICO score and have different number ranges. For example, FICO scores range from 300 to 850 while an Experian score ranges from 330 to 830. If you are noticing credit score differences just be sure you are looking at the same type of numbers.
Having a good credit score is important, but understanding how your score is determined is also a necessity. By taking these six issues into consideration when looking at your scores, you can have a better understanding of why your score is what it is and how you can improve it or protect it from errors.
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