Understanding Credit Score Differences
Understanding Credit Score Differences

There are few numbers in life that matter as much to your financial outlook and well-being as your credit score. However, confusion is the norm for consumers when it comes to this important financial gauge.

The History of Credit Scores

Prior to the creation of standardized credit scores, lenders and loan officers would often develop their own "score card" to assess the risk of lending to a particular borrower. This score card was based solely on one's credit report and could vary drastically from one lender to the next. The major issue with this original method was that it was based on a loan officer's ability to judge risk, rather than a common set of rules and specific calculations.

So, in the 1970's, the Fair Isaacs Company set up the first credit scoring system in order to help remove the inherent inconsistencies that arose from having each lender perform their own credit diagnostics. It has since become known as the FICO score and the algorithm has been widely adopted by America's largest credit reporting agencies.

Why Would My Score Differ Between Credit Agencies?

The three major credit bureaus are Equifax, Experian, and TransUnion. Simply put, the reason that the scores you receive may differ is that each score is dependent on the credit report that each receives and the scoring model they use.

In other words, Equifax might have not exactly the same information on you as Experian and vice versa. One credit bureau may be missing an account that either helps or hinders your score and will therefore report a different credit score than another credit bureau. If the system was perfect, this wouldn't happen. But since it isn't, you want to make sure that they all have the proper information by checking your three free credit reports every year at www.AnnualCreditReport.com.

Why Would My Score Differ Between the Same Credit Agency?

Credit bureaus use many different scoring models, even within the same credit bureau. Each bureau can use dozens of different credit score models based on the requirements of different lenders.

Each credit score model has a slightly different formula that takes into account over 200 different factors of your credit report; like a thumbprint, no credit score model is exactly the same. In addition, credit scores can change anytime so you have to make sure you are comparing credit scores from the same day.

As an example, a mortgage company will get a different score than a company providing auto loans, since they are looking for different types of credit history and credit factors.

Other Available Scores

While FICO is the most famous, there are several other versions and providers of credit scores, such as VantageScore, NextGen, BEACON, and EMPIRICA. Some scores are directly developed by credit bureaus, while others are developed by outside companies.

Is there a "Best Score?"

In a word, no. In order to protect revenues, credit reporting agencies will often position their scores as the best or the most predictive. In reality, all scores must adhere to similar guidelines to be truly predictive, regardless of the final output number. All credit scores are built from the same base set of data and statistical procedures.

Like many products and services in the marketplace, there are a plethora of different options for you (and the businesses that serve you) to choose from, simply because every buyer is different. Based on cost and effectiveness in each buying situation, there are credit scores for sale to satisfy each customer.

Score Ranges

Just as a point of reference, it may be important for you to know what the score rangers are for each of the major reporting agencies. While each agency uses internal predictors of certain events (e.g. how likely you are to file bankruptcy), the final credit score is not meant as a probability-meter for any specific event. In any case, the higher your score the better, as it is a general gauge of your overall credit worthiness in the eyes of lenders.

  • FICO: traditionally between 300 and 850
  • Experian: 330 - 830
  • Equifax: 300 - 850
  • TransUnion: 300 - 850
  • VantageScore: 501 - 990 (often assigned a letter grade, A - F)
Bottom Line

Because there are hundreds of credit scores that measure many different probabilities, consumers should not be overly concerned with the type of score or even their number. Rather, they should monitor changes within a single score.

It's also important to note that your credit score is a continuous variable which can change minute to minute. Every time your credit report changes, your credit score could change.

These complicated facets of credit scores are exactly why we developed Credit Karma. By keeping the bureau and credit scoring model consistent, we are hoping to provide consumers with a single, easier-to-follow point of reference on their credit health. Best of all, it's always free to check your credit score with us. In this way, you can update as often as you want and always have a consistent baseline to better understand how your score is changing and what you can do to make it better.

Update: Check out our new score summary page, which will compare your score to scores nationwide!

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Helpful to 7 out of 7 people

Getting penalized for not having debt is a no,no! It's just not right that you HAVE to HAVE some kind of history of debt payment to get good rates. I so bad want to pay cash for everything (working on that) and not worry about all this doodoo! Someone needs to put a cattle prod to the credit agencies to do an accurate job at reporting. And a faster job on taking off things that are paid off and don't need to be on record. They're sure quick to add the negative to your list. How about we all barter---------?

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Different Credit Scores
Helpful to 7 out of 7 people

Okay, I'm confused. On the 26th my credit monitoring service said my score thru experian was 640. So I decided to check all three..they were 599/553/515. Tonight I checked thru a different website and they were all in the 400's. Then I checked this site and it was 570 thru transunion. How in the world is that possible to have credit scores that different from the SAME CREDIT REPORTS????

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Helpful to 6 out of 6 people

Bottom line is this. The economy has tanked and has not reached the abyss yet. Big and small businesses will not stay business without some shady practices. Corruption in every aspect of business and politics has grown tremediously since 2008. Less jobs, products cost more and it is easier to control a poor population who depend on credit and large debt to fall into the hands of the economic disaster we live in today. Stop supporting debt and start saving your money under the mattress. The dollar is worth a small percentage of what it once was. You have no friends in this world of corruption, power and greed not to mention the half assed customer no service that seems to be a plague of it's own. 

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Helpful to 5 out of 5 people

Would have preferred that FICO never got involved and it was left up to the consumer and the potential lender to work out a deal.. noadays, you have brainless reps behind a phone relying on the "accuracy" of their third-party bought credit score.  What a joke this system is.  I get that the risk is completely with the lender, but the parameters where created as a secret sauce when FICO got involved.

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Helpful to 5 out of 5 people

you list my trans union? score as 729 yet  when one  of my credit card banks ran my trans union score  they got  776.  I give up on worrying about credit scores.  i just follow basic rules like keeping my usage well under ten percent and paying when due.. i have enough real problems to worry about at my age.

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Credit Score Ranges
Helpful to 5 out of 5 people

The technical specs we received for the score are 150-950. We haven't seen anything below 400 or anything near the 950. From my experience, the extremes are always hard to reach since it becomes exponentially more difficult. For example, 950 would imply no risk, and 150 guaranteed default.

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Helpful to 17 out of 20 people

I have a traditional score of 772 and a Vantage score of 702 (Grade C). Does that indicate some sort of issue? I have recently applied (successfully) for a mortgage.

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Helpful to 9 out of 10 people

 <quote>This is because whenever u take on new debt your score usually drops at first and then as you make steady payments on it u get positive credit for not only making on time payments but for lowering this new debt.</quote>

Why doesn't the government put a stop on this absolutely idiotic thing called credit score? People that have no debt and only one credit card, will always have a bad credit score. Absolute bs.

The banks, car dealers and whoever prefer customers that carry an addional financial burden already.

An entire economy based on debt. If you have no debt, then you are simply non existant for banks and credit rating agencies. No wonder the rest of the world is laughing about the US.

Why can't we switch to keeping track of negatvie entries such as late payment, default etc. instead of punishing people that pay on time, carry no balance?

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Helpful to 4 out of 4 people

Unreal!!! I purchase my credit reports every other month. Since the last reports were pulled there have been no changes except the on-time payments, and my score still drops 14 points. I had three different people look at them. The F'in' reports are identical!!!! 

I think it's time to petetion congress for changes:

1.  Consumers should be able to get thier indididual credit scores and reports at least monthly at no charge.

2.  There needs to be more costly punative damages for credit reporting agencies, and creditors for not correcting, or producing complete documentation which substantiates their claim(s). (in a lot of cases, creditors/collection agencies have no obligation to verify the information they report unless the request comes from the credit bureau. And, then the creditor only has to send a confirmation to credit bureau that the debt exists.(no proof, just confirmation).

3.  When an individual's credit score negatively changes, the credit bureau should have to explain how/why the credit score changed.

It's my beleif that these 3 changes will do more to benefit consumers than any adverse effect it may have on creditors or credit bureaus. I look forward to hearing you thoughts.


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Helpful to 4 out of 4 people

Credit Karmas Transunion score for me has been the same when I pulled a Transunion report. I also have Life Lock which provides all three scores using Transunion as the main one. I have found them and Credit Karma consistent in their reports. As I understand the Credit card companies and others report your debt on the first of each month. That is why I pay my cards down before then and see my score rise. By taking your total credit card combined and adding them you then can divide that by your total credit limits. Example: One card has $5000 limit and another has $1500 limit which would give you $6500 total. Your debt on both cards are at $4500.

By taking $4500 divided by $6500 = 69% of your card usage. I think the credit agencies favor in a score best for those that are below 30%. Credit card have the worse effect on score. That could raise you back up about 10 points or more. I love Credit Karma and appreciate their services. I took up one of their offers on a Truck payment and lowered it from 6.9% to 2.98% which is saving me a bundle. Life insurance was the same. That offer some great services considering there was nothing back in the 70s or even 90s that could help some one moniter their credit.

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