Here’s Why Your Credit Scores Are Different for Each Credit Bureau
Paying careful attention to your financial habits and monitoring your credit reports are some basic yet key moves when it comes to financial health. If you’ve ever reviewed your credit scores, you’ve probably noticed you have different scores from each bureau. But why is this? The Cheat Sheet is here to explain why.
Why do you have a different credit score for each bureau?
Know that it’s nothing to worry about when you have different scores among the bureaus. You get a credit score from each of the three credit bureaus (Equifax, Experian, and Transunion). Every 12 months, you’re entitled to one free report from each of them. The scores are calculated based on information the bureaus have on file for you.
Although most of your information will be similar among the three bureaus, there could be some information that is different. This is why it’s so important to order a copy of your credit reports each year. You can get your free copies when you log on to AnnualCreditReport.com.
Too many scores to count
There are several reasons why you have a different score from each bureau. One credit bureau may have information that isn’t being recorded by the other two. Another reason for discrepancies is that some of your information is weighted differently among the three bureaus.
Yet another reason is that there are different types of credit scores. Although FICO scores are the most widely used scores by lenders, there are other scores out there. There is the VantageScore, which was developed by all three credit bureaus and has a range of 300 to 850.
There is also the TransUnion New Account Score 2.0 (formerly called the TransRisk score). It has the same score range as the FICO score and VantageScore. The difference is that the TransUnion New Account Score 2.0 predicts the likelihood of an existing account holder becoming 90 days or more delinquent within a period of 24 months. There are many more score types and versions offered by the credit bureaus, but there are too many to name here.
The importance of time
Time is also a factor. If you check your FICO score at different times, for example, you’ll likely get different scores because credit scores change so often. Your credit score will rarely stay the same for a long period of time. There will be ups and downs. If you’re new to credit management, you might find this stressful or concerning, but this is to be expected.
How to improve your credit score
The best way to improve your credit score is to make sure to consistently pay all your bills on time and in full. Also, make time to order your credit reports and correct any errors as soon as possible. Another thing you want to keep an eye on is your balances. Maxed out accounts or accounts that are dangerously close to the credit limit are bad news. Utilizing a lot of your available credit shows lenders you’re having financial difficulty. If you’re having trouble paying your bills and need some help, consider speaking to a certified credit counselor so you can get back on track.
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