Why credit scores might vary between the credit bureaus
Why are my scores different for the three credit bureaus?
This is a very big question and confuses many people when they look at their credit reports and scores.
I will give you the answer according to FICO, the source of the scoring that most lenders use.
In the U.S., there are three national credit bureaus (Equifax, Experian and TransUnion) that compete to capture, update and store credit histories on most U.S. consumers.
While most of the information collected on consumers by the three credit bureaus is similar, there are differences.
For example, one credit bureau may have unique information captured on a consumer that is not being captured by the other two, or the same data element may be stored or displayed differently by the credit bureaus.
A predictive FICO scoring system resides at each of these credit bureaus from which lenders request a FICO® Score when evaluating a particular consumer’s credit risk.
The FICO scoring system design is similar across the credit bureaus so that consumers with high FICO Scores on bureau “A’s” data will likely see a similarly high FICO Score at the other two bureaus and conversely consumers with lower scores at bureau “A” will likely get a low FICO Score at the other two bureaus when the underlying data is the same across the bureaus.
When the scores are significantly different across bureaus, it is likely the underlying data in the credit bureaus is different and thus driving that observed score difference.
However, there can be score differences even when the underlying data is identical as each of the bureau’s FICO scoring system was designed to optimize the predictive value of their unique data.
Keep in mind the following points when comparing scores across bureaus:
• Not all credit scores are "FICO" scores. So, make sure the scores you are comparing are actual FICO Scores.
I see this a lot, especially with various credit monitoring companies like Credit Karma. You will also get non-FICO scores if you go to each individual credit bureaus website. The scores you get there are typically their own offering.
• The scores should be accessed at the same time. The passage of time can result in score differences due to model characteristics that have a time based component. Comparing a score pulled on bureau “A” from last week to a score pulled on bureau “B” today can be problematic as the “week old score” may already be “dated”.
• All of your credit information may not be reported to all three credit bureaus. The information on your credit report is supplied by lenders, collection agencies and court records. Don’t assume that each credit bureau has the same information pertaining to your credit history.
I had a situation where a client had medical collections, 20 of them in fact, showing up on his credit report. However, they were all being reported by the same collection agency, and that agency only reported to one of the bureaus. The result, was the score being significantly lower for that bureau.
• You may have applied for credit under different names (for example, Robert Jones versus Bob Jones) or a maiden name, which may cause fragmented or incomplete files at the credit reporting agencies. While, in most cases, the credit bureaus combine all files accurately under the same person, there are many instances where incomplete files or inaccurate data (social security numbers, addresses, etc.) cause one person’s information to appear on someone else’s credit report.
• Lenders report credit information to the credit bureaus at different times, often resulting in one agency having more up-to-date information than another.
• The credit bureaus may record, display or store the same information in different ways.
If you are finding you have some problems with your credit scores, a reputable credit restoration company like Heartland Credit Restoration is a great place to turn for help.
I welcome your comments and ask that you share this information with all your contacts on social media. We at Heartland Credit Restoration are all about helping people get positive control over their credit, and the more people that know this kind of information, the better.
If you are facing credit challenges, or you have a client that you are going to have to turn away due to credit challenges, then I encourage you to give me a call. We can look at how Heartland Credit Restoration might be able to help you turn things around and get that credit loan ready. There isn’t a better company you can go to for help. I will look forward to talking to you and I hope you have a wonderfully blessed day!