If you’ve ever been frustrated at receiving two different credit scores, you probably wondered why or how it’s possible that you can get one specific credit score from a certain source and then receive a vastly different credit score elsewhere.
You’re not alone. Millions of other people have also questioned the crazy, seemingly haphazardness way in which credit scores can vary, and sometimes by a large margin.
Here are five reasons why you could have two different credit scores.
Different companies generated the credit scores
The first, and most common reason, that you could have two different credit scores is because different companies generated or calculated those credit scores.
Many people mistakenly think that there’s a single credit score. But in reality, there are many dozens (even as many as hundreds) of credit scores. And each company that calculates those scores uses its own criteria and categories in order to come up with your credit score, typically a three-digit credit score.
For instance, both your FICO credit score and your VantageScore 3.0, another credit score, can range from 300 to 850 points.
But officials from Fair Isaac Corp., creator of the FICO credit score, say that they calculate your FICO score based on five factors: payment history; amounts owed; length of credit history; types of credit in use; and new credit.
By contrast, experts at VantageScore Solutions, LLC, the company behind the VantageScore, say that their score takes into account six factors: payment history; age and type of credit; credit utilization; total balances; recent credit behavior; available credit.
So, if you get these credit scores, you’ll have two different credit scores because two separate companies are using two different credit-scoring models.
Furthermore, assume you apply for a credit card and a mortgage from the exact same bank or financial institution. Surprisingly, you could even get two different credit scores from the same company, such as this lender.
How is this possible? A SourceMedia survey found that nearly 30% of lenders use more than one credit score model. Some banks even use their own propriety credit scoring models.
Different credit bureaus have issued your credit scores
The three major national credit reporting companies in the United States are: Equifax, Experian and TransUnion. By law, you are entitled to get a free credit report every 12 months from each of these credit bureaus.
But the credit bureaus don’t have to give you a credit score free of charge. So they sell credit scores. And each score is different.
For example, there’s the Equifax Credit Score, which is a proprietary credit model developed by Equifax. There’s the Experian-based FICO score, which is derived from the information contain in your Experian credit file., as well as the Experian National Risk Score. Also, there’s the TransRisk score from TransUnion.
As you can see, depending on where you obtain your score, you can wind up getting different credit scores.
Different information is contained in your various credit files
A third reason you can have different credit scores is imply because creditors may not report to all three bureaus. In this case, if the underlying data contained in your credit reports is different, that can cause you to have varying credit scores.
Anytime the specific information differs from one credit report to another credit report, that can dramatically impact your score.
For example, assume a car lender is reporting your auto loan to TransUnion but not to Experian for some reason. Now let’s further assume that you had a 30-day late payment on your auto loan.
Assuming everything else in your credit history was the same, if you obtained credit scores from those two credit bureaus, it’s likely that your TransUnion credit score would be lower than your Experian score. That’s because TransUnion would have knowledge of the 30-day late pay, but Experian wouldn’t.
Your credit scores were pulled at two different times
Credit scores are not static; they’re dynamic and constantly changing. So even if you were getting the same credit score – say from FICO – if you pulled a score in one month and then one month or possibly even one day later you pulled a score again, you could get a different score.
It all depends on what changes have occurred in your credit files. The passage of time alone can change your scores because your scores could increase simply by the aging of your accounts and the lengthening of your credit history.
Also, if information has changed, or been added to or deleted from your credit files in between the times you checked your credit scores, that can be a reason for credit score differences.
You’ve received an industry specific score
One final reason you might have two or more different credit scores is because a lender may have pulled what’s known as an industry-specific credit score.
Although most people think of credit scores as simply generic, overall credit scores, there are actually more finely nuanced credit scores that apply only to one industry.
Examples of these industry specific scores include: auto industry scores, student loan scores and mortgage scores.
Believe it or not, many types of businesses have all kinds of credit scores. Banks, lenders, utility companies, insurance companies retailers and others all have credit scores specific to their industries or lines of business.
Now that you understand why credit score can vary, the important thing to keep in mind is that while the scores can be off by several points or even a large amount, you should always keep tabs on your credit to make sure there aren’t errors in your credit files or mistakes that need to be fixed.-15-151-167
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