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.

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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1 Contribution
8 People Helped

Helpful to 8 out of 15 people

I wish people would learn how to spell and use proper grammar when spewing all their useless thoughts across the Internet! 

3 Contributions
13 People Helped

Helpful to 1 out of 1 people

I asked for an insurance quote by one of the places that you reccomended on here (MetLife), not only was the quote 3x what I am paying now, it dropped my insurance rating by 33 points!  I was very upset about this. Can you please explain this to me?

2 Contributions
6 People Helped

Helpful to 1 out of 1 people

How can I find out what accounts I owe? When I look on my report it says I owe 0, but then it says $16000. I don't understand where this is coming from.

6 Contributions
65 People Helped

Helpful to 1 out of 1 people

I just pull my credit report every jan . You get 1 free report every  from all agencys .  Then work on what ever needs improving.

2 Contributions
2 People Helped

Helpful to 1 out of 1 people

I requested a credit report from transunion and they advised they would not be sending me one because i can access my information off creditkarma.  has anyone else run accross this?

I also found creditkarma rates me lower than any of the other two credit agencies and my FICO score is always higher than creditkarma saids.

You should not be restricted from checking your credit report just because you have a Credit Karma account. Did you go through annualcreditreport.com to get your TransUnion report? As for the score, CFPB did a report on it. That's why it's important to pay attention to the factors influencing your score, not just the three-digit number. We show you those in your Credit Report Card.

Review by
CK Moderator

7 Contributions
9 People Helped

Helpful to 1 out of 1 people

Credit Katma, is bull **** I check with trans union that one the bank uses and my score is way above 700 jule credit karma had it at 726 this month it is 676 nothing has changed on my credit other then my credit card has only a small amount on it. By the way transrisk and trans union are not the same credit karma try and get it right!!!

One of the most common causes for a fluctuating credit score (when nothing else is evident) is your credit utilization rate. Did it recently go up? If so, that's actually good news because you can easily reduce it next month. Keep your credit card balances at less than 30 percent of your limits--that's a good guideline. Actually, TransRisk is a credit score generated by TransUnion, one of the major credit bureaus. Let us know if you have any other questions!

Review by
CK Moderator

5 Contributions
6 People Helped

Helpful to 1 out of 1 people

ere is the bottom line people your middle score is the one that counts as long as u pay on time there should never be a problem wrong ? dont close dont pay any fees to credit cards and try to finance through a credit union? peace out

Top Contributor
116 Contributions
370 People Helped

Helpful to 1 out of 1 people

 I have 2 bills in collection which lower my score.  I am 100% service-connected disabled and the VA pays my medical bills when I have to use a private hospital.  These hospitals are informed about this, but 2 doctors billed Medicare instead.  They want the other 20% from me.  They have been told to bill the VA and they will be paid but then they have to repay Medicare.  They refused and sent the bills to collection.  I have to be on Medicare because Medicare reimburses the VA for certain things.  I have explained this to the 3 major scoring companies but they say too bad and lowered my score.

Top Contributor
29 Contributions
31 People Helped

Helpful to 1 out of 1 people

Why does my vantagescore take 10 point hit for showing a $171 balance on a discovercard with a $30k limit ?

Transrisk score didnt & doesnt change.  Your page indicates some revolving debt is better than none but vantagescore CLEARLY penalizes me for even a miniscule amount. $171 on a $30k card and of $85k total revolving accounts.

I can & will pay it off every month prior to the statement date but I thought not doing so would help my score,not hurt it. 

1 Contribution
56 People Helped

What other scores?

Helpful to 56 out of 66 people

I am not so much interested in how I compare to the rest of the world as in where I fall in the ranges you are using. In other words, which of these are you using?

FICO: traditionally between 300 and 850.

Experian: 330 - 830

Equifax: 300 - 850

TransUnion: 150 - 950

VantageScore: 501 - 990 (often assigned a letter grade, A - F)

Reply by
JustinTW

8 Contributions
48 People Helped
Helpful to 4 out of 5 people

CreditKarma uses the TransRisk model, which is TransUnion's version of Credit Scores.

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