Understanding credit score differences

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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 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 1980's, the Fair Isaac Corporation set up the first general purpose credit scoring system based on credit bureau information 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. If you're seeing different scores from each bureau, there could be a few reasons for this. Here are some of the most common ones.

  1. The scores are from different dates. Since your score can change at any time, it's important to compare credit scores from the same date.
  2. The scores were calculated using different scoring models. We'll get into this in the next section, but it's important to know that there are many scoring models out there. When you compare scores among bureaus, make sure they are calculated using the same model. Even with the same model, your scores could vary because each bureau may store information or calculate the score a little differently.
  3. The information in your credit reports varies among credit bureaus. This actually isn't uncommon. Some lenders report to all three credit bureaus, but others report to just two or one or none at all. The information in your credit reports may also be updated at different times at each bureau. In other words, one credit bureau may be missing an account or other information that either helps or hinders your score.

Of course, it's also a good idea to check your credit reports for errors periodically since an error could affect your score. You can check your TransUnion and Equifax credit reports for free on Credit Karma and your Experian report on www.AnnualCreditReport.com.

Why would my score differ between the same credit agency?

Like a thumbprint, no credit score model is exactly the same. Each credit score model has a slightly different formula for weighing credit score factors. The credit bureau can use dozens of different credit score models based on the requirements of different lenders. As an example, a mortgage lender may use a different scoring model than an auto lender because they each place importance on different factors.

Though your scores may vary, they're all based on information in your credit reports. So focusing on what's in your reports could help you build your credit overall.

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.

 

You have more than one credit score. In fact, you probably have dozens. [Tweet this]

 

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 ranges are for each of the major scoring systems. The higher your score, the better, as it is a general gauge of your overall creditworthiness in the eyes of lenders.

  • FICO Score: 300 -850
  • Score from Experian: 330-830
  • Score from Equifax: 300-850
  • Score from TransUnion: 300-850
  • VantageScore 3.0: 300-850

Bottom line

Because there are hundreds of credit scores that measure many different probabilities, consumers generally do not need to be overly concerned with the type of score or even their number. It's also important to note that your credit score is a variable which can change every time your credit report changes. For these reasons, monitoring changes within a single score over time can be a better way to gauge your overall credit health.

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 access your score as often as you want and always have a consistent baseline to better understand how your score is changing.

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Use this form to report it to our editorial team. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

All Comments

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I follow my credit score off of your site, CreditKarma.com, it is stating that i have a fair score of 644. I am trying to do better with myself for myself and my family to actually move into our own house. Well we had been talking to a couple lenders and what not, and they are all stating that my score from a credit buearu is 100 points LESS then what credit karma is stating. Why is this? This is holding me back and I dont understand why its two different numbes with so many points apart?? What should I believe?

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All of this nonsense is designed to make you feel better about yourself with their "all famous,state of the art" Vantage 3.0 model that probably a very few recognize. I fell for this madness thinking I had a 752 score, but come to find out after being turned down I only had a 655! I can understand a +/- differential here and there, but 100 points!!! On top of that, I wouldn't have known that had I not been turned down at the hands of Chase (one of the many cards "they" shove down your throat! Trying to persuade you to get a debt transfer card!) You know what that's gonna do to your score, especially if you get turned down. Then that incident just sits and marinates on your report for what......7 years? I'm at the point where I'm not gonna worry or lose sleep over some stupid, flawed he said, she said credit scoring system. It is what it is! If I were you all, i'd just go with the flow and not get uptight over it. Continue to just do your best and make carefull decisions. The system is designed to spook you! 

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Credit Karma posts scores from TransUnion and Equifax but every time I seek to get credit the banks and loans companies seem to always use Experian which alkways scores lower than the two used by Credit Karma. It seems to me it would be more benefitial if Credit Karma used and posted scores from Experian.

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I also get a FICO score thorugh my credit card account, available on a daily basis, in addition to the weekly score reported by Credit Karma.

The difference between Credit Karma dn my CC FICO score, from the same credit agency, is that Credit Karma consistently reports my score as over 50 points below the official FICO score.

It is obvious to me that their FICO score reports are designed to sell high-interest credit cards to their customers. That is how they make their money, through the sale of high interest credit cards.

They  are simply salesmen, and their site is a "trap site" designed to convince folks that their actual FICO score is lower than it is, and that they 'deserve' to pay more interest on credit cards as a result of that.

Reply by
KPK1953

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Interesting perspective.  My FICO scores from credit cards are always 30-40 points lower than Equifax and Transunion scores I get from Credit Karma.   I would argue-at least in my case-that Credit Karma is the one trying to sell cards.

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I just purchased a new vehicle knowing that I would get a low interest rate due to my high score with Credit Karma and to my SURPRISE, my score was 73 points lower than what Credit Karma sends.  How furious was I.  Ok, I don't care that it's free, it needs to be accurate.  Free or not free, it should still operate as close as it can to excellence or nothing at all.  I'm just saying.  I was furious!

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I feel like the credit scoring system is a very screwed up system because , for one it doesn,t give people room to fail ..........It always assumes everyone is perfect and in the perfect world that would be awesome but, unforunately i dont live in the perfect world ....The other thing wrong with this system is when you do fail it wont allow you to come back up that easy because , it punishes you for years upon years and number 3 reason its screwed up is because when you do get behind on your credit card payment or your cell phone bill they are allowed to add numerous charges to your already late bill  as if adding insult to injury.....Its designed to for people that will never screw up and doesnt let you fail .....

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I have been a member for a long time and the 1st 2 years my score was always in the high 600 and for past few years you ..credit karma always states my score is in the high 500 ....when I get my credit score from my discover card every month and it is 687 so how is my score so low with you but I have no issues with any one else getting a loan or accounts and they give me my score and you guys are so way off on these credit scores ....that now I rarely check with credit karma because the scores are abot 100 points off...please explain as to why..........

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People are continuously ****ed over by this entire credit score racket....Scores go down much faster than they go up and for reasons that they shouldn't go down with in the first place...( like inquiries, opening a new credit card, or paying off an account ) 

The fact that the banking industry has such so much lobbying done on their behalf keeps the consumer constantly at risk of getting screwed over by these scores. Letting information stay on one's report for 7 years is beyond reasonable....Some senators have tried sponsoring bills to cut that amount of time in half....but the powerful banking lobbyists continually succeed in their efforts to prevent any change that benefits the consumers.

There is nothing fair about the credit score system period....It was designed to make the whole world of credit as difficult as possible for the consumer

Top Contributor
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Credit scores the consumer sees are a complete joke.  There's not ONE single consumer viewable credit score that will match a score a creditor sees.  The consumer scores are ALL inflated.  Every financial institution that issues credit cards and claim one of their features is viewable credit scores, couldn't care less whether it's accurate or not.  

I've actively rebuilt my credit over the past two years.  Nearly 15 years ago, I filed bankruptcy and had a foreclosure, and it's taken me this long to decide I'd like to buy a house instead of simply renting for another 15 years.

One of my credit cards has displayed nearly the EXACT same credit score +/- 10 points every month for nearly those past two years.  It repeatedly reminds me that no matter what I do, my credit score is never going to change.  Inquires: that credit card website couldn't care less.  Removed collections: so what, my score remains the same.  Low CC utilization across the board: it didn't bat an eye.  The funny thing is, this particular credit card company; of which I have two cards, increased my credit limit on both cards by 1000% less than six months ago.  But whenever I login to those cards' website I see a credit score that just won't increase!  

I've had five collections removed from my credit report around a year ago.  Sued the collection agency and less than one month after they were informed they were being sued for illegal debt collection: BAM, my credit reports were completely void of any collections, they were GONE! I paid off my auto loan almost a year ago, and shortly before that dropped $7,000 to almost pay off one of my visa cards.  That card's limit has since doubled.  I've added a couple credit cards and have had my limits increased from 2 to 5 times their original limits.  My credit cards are between 4 months and 7+ years old.  I've never missed a payment on any of them.  Never missed a payment on my former auto loan.  

So, here's the total bull**** part.  Of my nine credit cards.  Yes, that is correct.  Nine credit cards, four of those being two accounts each from separate lenders; so I have 7 financial institutions claiming I can track my credit scores online; EVERY SINGLE DAY, 24 hours a day, to help me keep track of my money management. it will help me become more responsible financially!

Then I go to buy a house.  I get pre-approved.  I'm informed of my limit, that I qualify for loan program X, and be prepared for fees of L,M, N, O, and most likely P.  93 days later, my credit report is pulled because they only hold them valid for 90 days.  I no longer qualify for the loan because my credit score is far too low and the reports were showing credit card balances that were higher than 90 days ago.  Remember Mr. Credit Card that claims my score is always going to be XYZ?  That balance was from 60 days prior to the new credit report my loan officer was holding.  So, it was INACCURATE.  The credit score that card receives from TransUnion, not even close to the score on my latest report the mortgage broker says I have.  

So, every month, Credit Karma, and my 7 online credit card accounts flash this completely useless number on the computer screen because NONE of them are even remotely as low as the score printed on the report my mortgage broker has.  Closest one is over 50 points higher and it's almost 100 points for the highest reported score.  

So, how does that help me?  It doesn't.  Here I am, thinking ok, just have to keep the utilization low. Keep any charges to a minimum or prefereably zero.  (I pay all my bills with my credit cards.  Groceries, gas, entertainment, utilities. EVERYTHING except rent.  When I get paid, billpay = rent check, and the rest distributed to all the credit cards.  Lather, rinse, repeat.  Good credit card usage.  Only two of my cards have a balance.  Actively monitor the (absolutely worthless) credit scores monthly, and here at CK weekly during this entire process.  I COMPLETELY forgot to SUBTRACT 100 points from any and all credit scores I'm shown, because THAT is what your mortgage lender will receive!   The score the broker was given is almost as poor as when my credit reports had the 5 collections and two credit cards at 95%+ utilization (one being that aforementioned $7,000 payment!).  

I'm told to pay off all my credit cards, get balance letters, and they'll run an updated score.  It will take 3-5 days.  That was around the 20th of last month.  Ok, November 1st, I pay $2600 down on the cards as instructed.  Get balance letters faxed and/or e-mailed directly to the broker by November 3rd.  They still haven't received an updated score to see if I 're-qualify' for the house I was trying to buy.  (The close date was actually yesterday, the 20th).  The bureau my broker is waiting for an update from has REFUSED to release a score as they are INVESTIGATING the 'excessive payments earlier this month'!  WTF?  

The best part.  I just logged into all 7 credit card websites, EVERY SCORE IS HIGH ENOUGH TO QUALIFY FOR THE HOME LOAN I somehow do NOT qualify for as of last month.  BOTH scores here, have been high enough to qualify for the loan SINCE I FIRST USED THIS SITE 18 months ago.  But the score the mortage broker is shoving in my face... it's 51 points lower than TransUnion shows here, and almost 100 points lower than I'm told by another website.  

Why?  Because now I'll have to GO THROUGH THE ENTIRE PROCESS AGAIN, get charged higher interest, more fees, and ultimately, a lot more money.  What can I do about it? NOT A GOD**** THING.

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I don't understand why there is such a big difference in the scores? Transunion was 651 and Equifax was 456 why is it such a big difference

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Not sure what everyone is complaining about when I managed to stop spending money for unecessary reasons and pulled my score up around 80 points in about a year and it still keeps going up weekly. Just follow the rules and you can do the same thing. 3 credit cards or 3 accounts that report, pay your bills on time, bring down your debt to credit ratio and voila! Also, do not close paid off accounts, and check out youtube for some good advice on how to improve your score, thats where i found my info. Its kind of fun and exciting seeing the scores continue to get better. My goal for the end of the year is to be well into the 700s. I cant imagine but if i keep going this way, maybe by end of next year I will be in the 800s! Woohoo!

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