As if understanding the complex scoring model that generates our credit scores isn’t difficult enough, we then have to understand why, depending on the credit reporting agency, our credit score is different.
As we discussed in a previous article, the three major credit reporting agencies, Equifax, Experian and TransUnion have different names for their credit scores, which may even be calculated based on different credit scoring models, like the FICO model. Certain factors go into each and every credit score, regardless of how the score is calculated by the agency.
- 35% of the score is usually related to the payment history of the consumer. This aspect accounts for the largest portion of a consumer’s credit score, so it is important to make all payments on time all the time. One late payment can ding your credit score.
- 30% relates to credit utilization which is the amount of credit used versus the amount of credit available to the consumer. This number is fluid depending on what your outstanding credit balance is when you run your score and when you pay your outstanding balance.
- 15% of the overall score is related to the length of your overall credit history, so over time this can vary.
- 10% is based on type of credit used such as a mortgage vs. unsecured credit card debt.
- And the last 10% of your score depends on just how many (and what kind of) new credit account yous have.
Despite the fact that the scoring methodology and factors used to develop the credit score are similar across credit reporting agencies, a consumer’s credit score can differ depending on the credit agency. Credit bureaus collect data independently of each other and typically, they don’t share the data among each other.
Additionally, creditors and lenders may report data only to one or two of the credit bureaus. As a result, the reports generated by Equifax, Experian, and TransUnion may all look different from one another and accordingly, produce different scores.
Each credit bureau uses the information that it has in your file on your credit history to calculate their proprietary credit score. For example, TransUnion calculates your credit score with the data in your TransUnion credit report; therefore, if you have a collection account that appears on your TransUnion credit report, but not on your Experian credit report, your TransUnion credit score may be lower.
Additionally, an account could be reported by a lender/creditor to all three credit reporting agencies, yet the consumer may dispute the negative account and have it dismissed on one or two reports only. It is at the discretion of the credit reporting agency and their dispute department as to whether they believe you have provided enough evidence or information to have the account removed.
As a result, Experian may remove a negative account because they feel the consumer has provided enough information to successfully dispute it, while Equifax may not feel the account warrants removal from the consumer’s report. This is another instance that could cause the scores produced by the agencies to be different.
Finally, it’s important to note that the actual credit score range at the different credit agencies varies. For instance, the credit score range a consumer receives from Experian known as the Experian/Fair Isaac Risk Model or PLUS, ranges from 330-830; the TransUnion score, also known as EMPIRICA, ranges from 300-850 and the score Equifax uses, Beacon, ranges from 350-850. Because the scoring range is different, it is likely that even if the report contains the same information on a consumer, the score will differ slightly due to the relative weight assigned to each factor and the scoring range.
Hopefully we’ve done well in teaching you a little something about credit scores. They are admittedly confusing and most likely will vary based on the credit agency. If you would like to check your credit score for free and see how it stacks up, visit our free credit score comparison page.