Why Your Credit Scores Differ Across the Three Bureaus

If you’ve ever checked your credit scores with all three major credit bureaus—Equifax, Experian, and TransUnion—you probably noticed they’re rarely identical. Here’s why it’s normal (and expected!) for your scores to be different between bureaus.

Why Your Credit Scores Differ

1. Different Credit Scoring Models

Each bureau can use different scoring models, like various versions of FICO or VantageScore. Even if two bureaus use the “same” model (for example, FICO Score 8), each has its own slight variations and proprietary settings. Lenders and monitoring services might use different models, too, leading to score variations.

2. Not All Lenders Report to Every Bureau

Creditors (banks, credit card companies, lenders, etc.) aren’t required to report your account activity to all three bureaus. Some might only report to one or two. As a result, an account (or a missed payment, new loan, or credit inquiry) might show up on only one report, but not on the others, resulting in different scores.

3. Timing Differences

Each bureau updates your credit data on its own schedule. If a lender or credit card company reports a payment or balance to Equifax this week and to TransUnion next week, your scores may differ simply because one bureau is working with more recent information.

4. Data Entry or Reporting Errors

Small errors—like name variations (Robert vs. Bob), incorrect account details, or even merged credit files—can cause differences between the information each bureau has for you, leading to varying scores.

5. Unique Data Handling Methods

Each bureau uses slightly different weighting or formulas, and some even accept additional data (like certain rental payments) that others don’t. Some bureaus may remove negative marks at different times. This means the exact same financial behavior might be scored or viewed a little differently by each agency.

What Can You Do?

• Review all three credit reports regularly to check for errors or missing information.

• Dispute inaccuracies directly with the bureau that has the incorrect data.

• Understand that variations are normal: Minor differences (a few points) are common. Large differences (over 100 points) may signal an error worth investigating.

Bottom line:
Your credit scores vary because each bureau receives, processes, and scores your financial data in its own way. Lenders might use any of these scores (or averages/middle scores) when making decisions, so it’s important to keep all three bureau reports in good shapeshape

What Do Lenders Really See When They Check Your Credit Report?

What Do Lenders Really See When They Check Your Credit Report?

Have you ever wondered what lenders actually see when they pull your credit report? It's not just a mysterious number that determines your fate. Let's explore the key elements that lenders examine when reviewing your credit history.

Your Personal Profile

First things first, lenders will see your basic personal information:

- Full name

- Current and previous addresses

- Social Security number

- Date of birth

This information helps verify your identity and ensures they're looking at the right person's credit history.

The Credit Account Lowdown

Next comes the meat of your credit report – your credit accounts. Lenders will see:

- Types of accounts (credit cards, mortgages, auto loans, etc.)

- When each account was opened

- Credit limits and loan amounts

- Current balances

- Payment history (including on-time payments and any late payments)

This section gives lenders a comprehensive view of how you've managed credit in the past. They'll be looking for a history of on-time payments and responsible credit use.

Public Records and Collections

Any public records related to your finances will show up here. This includes:

- Bankruptcies

- Tax liens

- Judgments

- Collection accounts

These items can significantly impact your creditworthiness, so lenders pay close attention to this section.

Credit Inquiries

Lenders can see who else has been checking your credit. There are two types of inquiries:

1. Soft inquiries (when you check your own credit)

2. Hard inquiries (when you apply for credit)

Too many hard inquiries in a short period can be a red flag for lenders, suggesting you might be taking on too much new credit.

Credit Scores

While not technically part of your credit report, lenders often receive credit scores along with the report. These scores, like FICO or VantageScore, provide a quick snapshot of your creditworthiness.

The Big Picture

Lenders aren't just looking at individual elements; they're piecing together an overall picture of your credit health. They'll consider:

- Length of credit history

- Credit utilization (how much of your available credit you're using)

- Mix of credit types

- Recent credit activity

What This Means for You

Understanding what lenders see can help you manage your credit more effectively. Here are some key takeaways:

1. Regularly check your credit reports for accuracy

2. Make payments on time, every time

3. Keep credit card balances low

4. Be cautious about applying for new credit

5. Maintain a mix of credit types if possible

Remember, your credit report tells your financial story. By managing your credit responsibly, you're writing a story that lenders will want to read – and one that could open doors to better financial opportunities in the future.

Twitter Shredded by Credit Karma's Comically Inaccurate Scoring

Last week, Twitter was bombarded with consumers expressing their (hilarious) frustrations concerning their credit scores provided by Credit Karma, the personal finance company owned by Intuit. 

The frustration comes from users realizing that Credit Karma is providing them with lower credit scores than what is found on their credit reports. 

Consumers were tweeting about applying for credit cards, loans, and attempting to purchase vehicles thinking that they had good or excellent credit, only to find out that the credit score that the issuer pulled was lower than what they had found on Credit Karma. The tweet that started the meme trend can be found here.  

Twitter users were quick to share and create memes about how their credit score was inflated on Credit Karma. @RiotGrlErin had even tweeted “checking your credit score on credit karma is like checking your symptoms on WebMd.”

But, users were on to something important when it comes to checking your credit score. There are many reasons why your credit scores differ between what a personal finance website tells you and what lenders or credit card companies find. There are mainly two reasons: For one, a lender may pull your credit from different credit bureaus, either Equifax, Experian, or TransUnion. Your score can differ depending on which bureau your report is pulled from, since they do not all receive the same information about your credit accounts. Secondly, there are different credit score models and versions that exist across the board. 

Credit Karma’s website states that they use the VantageScore® 3.0 model. VantageScore may look at the same facts that the other popular FICO scoring models does, such as your payment history, amounts owed, length of credit history, new credit and your credit mix but each scoring model weighs these factors differently. Because of this, VantageScore and FICO Scores tend to vary from one another. The VantageScore® 3.0 on Credit Karma will likely be different from your FICO Score that lenders use most often. If you are planning on applying for credit, make sure to check your FICO score since there is a good chance that lenders will use this to determine your creditworthiness. FICO Scores are used in over 90% of U.S. lending decisions. It is important to note that there are also industry-specific FICO Scores to look at when you are planning a specific purchase. For example FICO® Auto Scores are ideal if you are wanting to finance a car with an auto loan. If you are planning to buy a house you should look at FICO® Scores 2, 5 and 4. 

The best way to look at your scores is to visit www.annualcreditreport.com where you can access and download your reports from Equifax, Experian, and Trans Union. Due to Covid, your report is free to access once a week until April 2021. 

Feel free to shoot us a message for any questions!