Lenders and other service providers frequently use credit scores as a tool to help determine the likelihood that their applicants and current clients won’t adhere to the terms of their loans or contracts. There are several places to obtain credit scores, including all three of the national consumer credit bureaus (Experian, TransUnion, and Equifax). Credit scores are determined by credit scoring models utilizing the data in your credit reports. Due to the wide variety of credit scoring models on the market, the model that a lender chooses to use can affect your credit score. Due to variations in the information submitted to each of your credit reports, it may also differ based on which credit bureau the data was obtained from.
Unraveling the Mystery of Your Credit Score Discrepancies
Ever checked your credit score and felt like you were looking at three different people? You’re not alone Many people experience discrepancies between their Experian, TransUnion, and Equifax scores, leaving them scratching their heads in confusion
But fret not, my friend, for I’m here to shed some light on this perplexing phenomenon. Buckle up as we dive deep into the world of credit scoring and uncover the reasons behind these score variations.
The Three Musketeers of Credit Bureaus: Experian, TransUnion and Equifax
Before we delve into the discrepancies, let’s first understand the players involved. In the US, the three main credit bureaus are Equifax, TransUnion, and Experian. They gather and preserve data about your credit history, encompassing payment patterns, outstanding balances, and credit queries. Your credit score, which is a three-digit figure that indicates your creditworthiness, is then calculated using this information.
The Plot Thickens: Why Your Scores Differ
So, why do your scores differ across these three bureaus? Here are the main culprits:
1. Variations in Reporting:
Each credit bureau receives information from different sources. While some lenders may only report to one or two of the three bureaus, others may report to all three. This may result in disparities between the data that each bureau has about you, which could affect your score.
2. Time Lags:
Credit bureaus don’t update your information simultaneously. There can be a delay of several days or even weeks between updates. If you recently made a change to your credit, such as paying off a debt, it may not be reflected in all three bureaus immediately, leading to score differences.
3. Different Scoring Models:
Each credit bureau uses slightly different scoring models. Even though the models are similar, your scores may differ because of how differently they weigh different factors.
4. Inquiries:
Your credit score may be impacted by credit inquiries, which happen when you apply for new credit. However, the impact varies depending on the type of inquiry. Hard inquiries, which come up when you apply for a credit card or loan, have the potential to slightly reduce your score. When you check your own credit score or get pre-approved for an offer from a lender, these are known as soft inquiries, and they have no effect on your score. A lower score could result from more difficult questions on one bureau’s report than the others.
5. Errors:
It’s not uncommon for errors to occur on credit reports. These errors can include inaccurate information, such as a closed account being reported as open or a debt being incorrectly attributed to you. If an error appears on one of your credit reports, it could significantly impact your score.
The Plot Twist: What You Can Do
Now that you understand the reasons behind your score discrepancies, here’s what you can do:
1. Monitor Your Credit Reports Regularly:
It’s crucial to regularly monitor your credit reports from all three bureaus for any errors or inconsistencies. You can obtain free copies of your reports once a year from AnnualCreditReport.com.
2. Dispute Any Errors:
If you find an error on your credit report, dispute it immediately with the credit bureau. You can do this online, by mail, or by phone. The credit bureau is obligated to investigate the dispute and correct any errors within 30 days.
3. Be Mindful of Inquiries:
Avoid applying for multiple credit cards or loans within a short period. Each inquiry can lower your score, and the impact is greater when multiple inquiries occur in a short timeframe.
4. Practice Responsible Credit Management:
Pay your bills on time, keep your credit utilization low, and avoid opening too many new accounts. These responsible credit management practices will help improve your credit score over time.
5. Consider Credit Monitoring Services:
Credit monitoring services can alert you to any changes in your credit reports, including new inquiries, accounts, or negative information. This can help you catch errors early and take steps to correct them.
Remember, Your Credit Score Is a Journey, Not a Destination
Don’t get discouraged if your scores differ across bureaus. Focus on building a positive credit history by following the tips above. Over time, your scores will converge and reflect your overall creditworthiness accurately.
Bonus Tip: Leverage Experian Boost®
Experian Boost® is a free service that allows you to add positive information from your utility and phone bills to your Experian credit report. This can help improve your Experian credit score and potentially narrow the gap between your scores across the three bureaus.
Will Checking Your Credit Reports Affect Your Credit Scores?
Checking your credit reports from the credit bureaus will not affect your credit scores. When you check your credit report, a “soft” credit inquiry is posted to that report. Soft inquiries, which are different from hard inquiries, do not impact your credit scores.
In actuality, credit scoring models such as FICO® and VantageScore are unable to see the soft inquiries that show up on your credit reports. It’s possible that even hard inquiries—which scoring models can detect—won’t significantly affect your credit scores.
Reasons Why Your Credit Scores Differ From Bureau to Bureau
Its unlikely that youll have the same credit score across each of the three credit bureaus. In fact, there are several reasons why your scores from Experian, TransUnion and Equifax are typically different.
While it is possible for you to have only one credit score, its unusual. Consumers normally do not have a single score but rather many credit scores. This is caused by a number of things, including the numerous credit score brands, score variations, and score generations that are ever used in commerce. Even in the rare event that your credit reports are identical from all three credit bureaus, these factors are likely to produce different credit scores.
Your VantageScore 3 score and your FICO® 8 score, for instance, would probably differ if you checked them. This would most likely remain the case even if you verified those two scores on the same day and with the same credit bureau. Various credit scoring systems may not take the same information into account, have the same score range, or produce the same numerical scores, even though they are generally made to do the same things.
The three credit bureaus are different companies, and each one maintains its own credit report information. Your three credit reports will therefore probably differ from one another at all times, if not more.
Your credit reports may differ for a number of reasons, one of which is related to the businesses that “furnish” the credit bureaus with information. While most lenders provide data to all three major credit bureaus, some may only provide data to one or two of them Due to the disparity in data, each credit bureau issues unique credit reports, which may result in varying credit scores among the agencies.
The quantity of hard inquiries that show up on your three credit reports at any given time is another way that they could differ from one another. Credit scoring models view hard inquiries, which are typically made when you apply for credit, and they may, albeit slightly, affect your credit scores.
It’s highly likely that a bank or credit union will pull one of your credit reports as part of the underwriting procedure if you’ve applied for a credit card with them. However, they may not pull all three of your credit reports. This implies that there will be a hard inquiry record on one of your three credit reports that is not present on the other two. That can lead to a difference in your credit scores across credit bureaus.
Another reason you may see discrepancies in your credit scores has to do with when they are produced. Your credit scores are not a part of your credit report that change over time as your credit report data changes; rather, they are calculated at a specific point in time, commonly referred to as a “snapshot” in the parlance of credit scoring. Rather, they are an independent instrument that assesses the data in your report and shows the danger of lending to you. Your score is computed and reflects your credit history at that moment when it is requested by a lender, another party, or you.
The information on your credit report provided by lenders with whom you have open accounts is typically updated once a month. While accounts are updated monthly, each lender may report updates at different times throughout the month. As a result, your credit reports can go through a series of changes every 30 days. The reason the two scores won’t match if your credit score was determined at the start of the month and then again at the end is that your credit report has probably been updated, sometimes multiple times, in between.
If more unfavorable information is added to your credit reports, the difference in scores over time may become more noticeable. Negative information can include late payments, collection accounts, bankruptcy or defaults. When compared to previous scores, the addition of negative information can result in a significant score difference because it can lower credit scores.
Why Equifax, Experian, and Transunion Have Different Scores
FAQ
Why is my Experian score so low compared to Equifax?
Why is my credit score so much lower on Experian?
Which credit score is most accurate?
Which credit bureau is usually the lowest?