When people want to find out what their credit scores are, they are often told to consult the three main credit bureaus: Experian, TransUnion, and Equifax. Most people think that all three bureaus should report the same credit score since they are all monitoring your credit history, thus leading to the same credit score.
However, this rarely ever happens; quite often, you’ll have three credit scores which are different. Sometimes, those scores are very similar to each other, and this is due to the slightly different models that each bureau uses to calculate the scores. Many times, though, the three scores will vary considerably. You may be wondering how this could possibly happen.
There are several reasons why there can be a wide variance in your credit scores. One reason is that not all of the credit scores are actually FICO scores that are developed by Fair Isaac Corporation. It’s important to compare actual FICO scores to each other to get the best reading of your credit history.
A second reason is that not all of your credit information is being reported to all three credit bureaus. This can lead to considerable differences in the three scores that are reported. This is because not all bureaus have all of your credit history, including negative actions that can adversely affect your credit rating. If one or more negative actions are missing from one or two bureaus, their rating of your credit will be considerably higher than the one or two bureaus that do include the negative actions in your credit history.
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A third reason is that you may have applied for credit under different names. For instance, if your name is Joe, you may have entered “Joe” as your first name on one credit application and “Joseph” as your first name on another credit application. While the credit bureaus often combine such information correctly to reflect that it’s the same person’s information, there are cases that they miss, which can lead to widely diverse credit scores.
Lenders that report your credit information to the credit bureaus report that information at different times; as a result, one bureau may have already included the information in your credit record, whereas another bureau may not have received the information yet, and as a result, hasn’t included the information in your credit record yet. This can lead to differences in the resulting credit scores.
As was mentioned above, the credit bureaus use slightly different models to calculate your credit scores. In addition, they also will use the information they discover in different ways, which can also lead to variances in the credit scores.
As you can see, there are several reasons why your three credit scores from the main credit reporting bureaus can differ. Besides the facts that the bureaus use slightly different scoring models and may use the information they obtain in slightly different ways, the bureaus may not receive the same information or not receive the information at the same time, leading to considerably different credit scores. This is why it is important that you obtain your credit scores from all three credit reporting bureaus on a regular basis and have some idea of what the reports contain so that you can have a better understanding of how good or bad your credit is and the best course of action for you to take in regards to your credit.
Three Credit Scores, 3 Different Credit Scores, Really these are all Educational Credit Scores for an industry that is sucking the average American Dry. You only need 1 (yes 1 credit score) it needs to be a FICO score.
Updated: 25 Sept 2012
“In the US, about 600 credit reporting agencies and 4,500 collection agencies generate annual revenue of about $19 billion. Major collection agencies include Asset Acceptance Capital, GC Services, and NCO Group; major credit reporting agencies include Dun & Bradstreet, Equifax, Experian, and TransUnion. The collections segment of the industry, which accounts for about 60 percent of revenue, is fragmented: the 50 largest companies account for less than 50 percent of revenue. The credit reporting segment, which accounts for about 40 percent of industry revenue, is highly concentrated: the 50 largest companies account for about 90 percent of revenue” Source: FirstResearchTags: Credit bureau, Personally identifiable information, Fair Isaac Corporation, credit information