Why do You Have Different Credit Scores?
If you commonly check your credit scores for free on a variety of sites, you may have come to a realization that all your scores have a difference of a few points. Don’t worry, having different credit scores is absolutely normal. This guide should help you better understand why this is a common occurrence.
Why Are Your Scores Different Between Agencies?
There are more than a few different reasons why you are seeing different credit scores from different sources. Here are three of the biggest culprits:
Every credit bureau uses different scoring methods.
There are a variety of methods to grade your credit, which credit bureaus use to determine your overall score. For example, all three credit bureaus grouped together using their different methods to create VantageScore. Plus, FICO has their own model for grading credit as well. Banks even use their own credit scoring methods to decide if you’re the right match for a loans or credit card.
Your credit scores are from alternate dates.
Because your score is able to change at any time, some companies may be behind in updating your score than other companies. For example. CreditKarma updates your credit score every week.
Credit bureaus don’t all have the same credit information.
The three main credit bureaus all collect their information on you by themselves. They aren’t usually inclined on sharing. Also, your lenders may only be required to share their data to two of the three credit bureaus.
Why do You Have Different Credit Scores Within the Same Agency?
Similar to your own thumbprint, your credit score is never the same. Since each credit model is different, these weigh in which can change your credit ever so slightly. Also, the credit agency that is reporting to your lender can be restricted to a variety of requirements set in place.
However, no matter what kind of change you are seeing on your credit reports, all the information they provide is accurate. It’s important to take your credit score reports seriously and keep your finances on track.
What Type of Credit Score is Your Lender Using?
Since your lender may be using multiple credit bureaus to determine your credit score. It can be difficult deciding on which bureaus to check on your score. However, you can always ask your lender which types of credit score they use to determine whether or not to accept your application for a loan, credit score, fund, etc. But, they do have the right to deny your request, which you shouldn’t take to heart.
The truth is that many lenders use FICO scores. Luckily, you can buy your FICO score, which is backed by Experian, Equifax, and Transunion.
There Are Credit Scores You Don’t Even Know About
Besides knowing the scores you can either get for free or purchase, there are dozens of credit scores pertaining to you that you don’t know about or can check. For example, there are mortgage, auto insurance, and bankruptcy credit scores. However, these scores won’t affect your ability to purchase things online, since they correlate to their specific industry.
FICO scores are the most common among most lenders, but other versions of your score include VantageScore, BEACON, NextGen, and EMPIRICA. Most of your scores are created by the three main credit bureaus. Some are still developed by third-party companies.
Which Credit Score Is The Best?
Since there are so many different providers of credit scores, you may be wondering if one is truly better than the others. However, in general, no one score is better or more accurate than any other.
To stay competitive within the industry, credit reporting companies will state that they have the most predictive credit scores. This is an overstatement as most agencies use similar guidelines to determine scores. If two different companies are using the same data to determine the score, they will likely reach the same result. Between agencies, credit scores tend to vary only slightly.
Why Should You Even Check Your Credit Score?
After reading all this, it may seem pointless to even check your credit score. Though the credit score you see will likely not be the same one your potential lender will see, you should still check your credit report frequently. By tracking your score, you can get a general idea of where you stand credit-wise.
Even though the exact number may not be the same, you can still determine whether your score is good or bad. You can also figure out if you need to take steps necessary to improve your score to increase your odds in the future. Get a free copy of your general credit report from each of the three big credit reporting bureaus (Experian, TransUnion, and Equifax) to get a better idea of your credit history.
The Takeaway on Why There are Different Credit Scores
With hundreds of different credit scores out there, each one measuring something slightly different, it can be easy to become overwhelmed. To prevent this from driving you crazy, it is important to focus on what really matters. It is not the type of credit score, nor is it even the actual number. Instead, pay attention to the changes in your credit report.
Your credit score can change every time there is a change in your report; it is not a steady constant. By keeping track of one credit report and noting the changes over time, you can get a better grasp on overall credit and financial health. This will let you know what you can improve upon. By making positive changes, you can improve all of your credit scores.