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!


All Comments
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Helpful to 1 out of 1 people

My credit karma score is 687, but my transunion score is 825 why such a big difference.

Comment by
skyrider65

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credit karma score 770

fico score 849.

Really??

Comment by
itchieg

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Just received an email from Experian stated they are using many deferent score models and they can't tell me about them. If they don't want to tell me about the models how can I challenge them if something wrong. So I have credit score from Experian and my creditors have score with more then a 100 points score low.  And I was thinking I have a right to know my score haha. So what is my score??? It's a good question. 

Comment by
Shaharkenan

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This whole issue of credit scores is baffling.  My credit union just ran my score and it was 702 from TransUnion and yet it says 756 on CK, which is supposedly TransUnion.  My FICO score was 759, and Experian 726.   I ran these scores over the weekend on MyFico and Credit Sesame.  I don't understand why there would be such a huge disparity in scores.  It's frustrating because I'm trying to get a car loan and the best interest rate I could get was 5.95.

Comment by
cet5280

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Need advice...My credit score is in the 570's. My score dropped 32 pts since June. I was late in the past on credit cards.  I dont use credit cards at all now.  I only owe on my house.  No car payments, credit cards, etc.  How can I get my credit score up?  I can't get approved for anything.  Thank you!

Comment by
machof330

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From my experience, having NO credit is as bad as having bad credit.  Open a revolving charge with someone (I used Fingerhut and Amazon) and buy something that you make payments on (appliances, furniture) and then be sure to make the required payments on time for at least 6 months.  Only charge small amounts that can be paid off in 6 months or less.  You need to establish some kind of record that shows you can make payments on an account on a regular and timely basis in order to show you are a good credit risk.

Reply by
stillwaiting2c

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Personally I think the credit score is a crock! Many years ago no one even had a credit score and they lived fine. I say do away with them, it seems like anyone that has had a financial hardship can never get ahead with this system still in place. And definitely just applying for a credit card should not knock your score down, if you don't qualify you don't qualify for the card period.Don't penalize someone for just checking that's ridiculous!

Comment by
jnerfing

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Agreed, they are a crock and are used as a way to keep the working people down!

Reply by
stillwaiting2c

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I just signed up with Lexington Law Center, and it looks positive. Things like sending letters and requiring proof from reporters on my credit accounts or demand they take there negative things off. I have sent letters to people that reported on my account with names that are not me, or in states thant I've never been. I have not gotten a response from most. Hoplefully the center can get a response and have these taken off. I have to have a score of 650 or higher to be issued a liscence as a general contractor, or get a surrity bond which the banks won't give unless you have a high credit score. Wish me luck...thanks!

Comment by
SeeGriz

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The credit scores on this site make no sense.  I charged $7,000 in March while in Bangkok and paid it off in the last two months... my credit score hasn't reflected this at all.  However, It dropped when I cancelled a credit card right before my trip and in order to bring it back up again I applied and received another card... I was just informed because of receiving the second card account my score has DROPPED another 14 points, from an excellent to good.  I owe a grand total of $200.00 on this card and that's all I owe to anyone... what kind of credit scoring is this?

Comment by
ratt57

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Why are insurance companies even using our credit score?  They use to go off your driving record, accidents, claims etc.  Its just another way for both credit scores (banks) and insurance companies to get more money out of us!

Comment by
porteam

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My vantage score just went down 4 points... my payments are still being made on time ... I don't understand why it dropped.

Comment by
chumalu

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