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 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. 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 freeTransUnion and Equifax credit reports on Credit Karma and your Experian on 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 some of the 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 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.

Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

All Comments

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1 Contribution
39 People Helped

Transunion

Helpful to 39 out of 46 people

From what I understand Credit Karma is using TransUnion to determine the score -- at least on Feb. 16 they are...

1 Contribution
2 People Helped

Helpful to 2 out of 2 people

I see above that Karma uses Transunion as their provider. Why would my score not be reported as the same between Karma (742) and Transunion (726). Moreover, the other two agencies report my score even lower with both coming in at 705...

This article explains the reasons why. Lastly, TrueCredit uses Vantage and Credit Karma uses TransRisk.

Review by
CK Moderator

1 Contribution
4 People Helped

Helpful to 4 out of 5 people

My credit was excellent ten years ago until my divorce, should I be held accountable for another individual opening up credit cards in my name and not paying them, not to mention not paying a car payment that I was paying her monthly to do? I would say not. Do people realize and there are multiple articles written about this, forty two percent of all negative reporting done on credit bureaus are either wrong or false. You would need forty eight hours in a day to keep up. Now here is a question to ponder, if the reporting is wrong forty two percent of the time and a credit bureau can’t dictate a recession, divorce, accident, illness, loss of employment, life great accidents, then why are they in place? Legalized interest extortion, something to ponder.

Reply by
sonic4031

8 Contributions
0 People Helped

shouldnt have open'd them in your name for someone else. Its not the lenders fault that you personal life didnt go right. consider going ofter your spouse in court and having him/her pay them.

2 Contributions
3 People Helped

Helpful to 2 out of 2 people

My credit is score is very poor! The main thing that I have on my credit is medical bills. I didn't think that medical could show up and or effect your credit score! Is there any way to get around the medical bills to improve my score?????

Reply by
Anemone

1 Contribution
0 People Helped

I was in the same position. Try to work out with the medical provider, they work with you. A plan with installment payments will work best, this way, the provider will clear your name from the credit bureau and you are not burdend with all the payments at one time.

1 Contribution
3 People Helped

Helpful to 3 out of 4 people

My score keeps going down everytime I check it here on creditkarma.com. My score has gone down from a 660 to a 628. I checked it this evening and now it is a freaking 614! One thing that screwed me up was the fact that Macy's stop reporting the line of credit but my balance is showing which is only 13% of the line of credit. That was my only revolving line of credit that was open so the formulas make it seems as if I have a high debt/credit limit ratio. I do not appreciate this at all.

Top Contributor

Reply by
JohnHoer

89 Contributions
185 People Helped
Helpful to 2 out of 2 people

I'm having the same problem on CreditKarma. My score has been decreasing and then it doesn't budge at all. On Quizzle.com my score is 767. And on Credit.com I have an A and they have me on par with an excellent score for Vantage Score, Beacon, Credit Expert, Experian, Equifax and Trans Union.

So, what score does Credit Karma use?

Reply by
rlmartin9

1 Contribution
0 People Helped

I have had the same experience. I have checked my score 2 times, and my score has decreased. The only change from last month is that 2 inquiries are showing up. I have not applied for anything. I hope the inquiries are not the result of checking my credit score on creditkarma!

Top Contributor
21 Contributions
27 People Helped

Helpful to 2 out of 2 people

My bankruptcy will be falling off my credit report in about 3 years. How will that impact my credit score?

1 Contribution
10 People Helped

Different Credit Scores

Helpful to 10 out of 10 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????

Reply by
wvl2005

2 Contributions
10 People Helped
Helpful to 5 out of 5 people

Listen Its a free service that lets you Monitor your credit which I enjoy over the past three yrs, great job with alerts as soon as anything changes. There basically four score out there, FICO (which to me is an average of all 3 agencies- TransUnion, Equifax  & Experian. This site uses TransU score (Not FICO) which dont expect it to be accurate for free, if you want the accurate one pay for it thru Transunion. I knew my T-score b4 I join this site and its was 20 pts above this site so i just kept that in mind to judge my real TScore each month i visited. So if this site say ur Tscore is 600 its actually between 605-620. My wife and I uses this site to Monitor so I have alot data to conclude my judgement range. Two weeks ago I took out a loan I received all there scores, TransU which was the lowest of all three - 775 but on this site it's 768 which surprises me because thats pretty close. Discover now gives you free credit score and they say uses TransU also but it was saying 796 which to me is TransU FICO score because when I average all three actual scores (821\802\775) recently it was 798 which was pretty darn close to my Discover FiCO score of 796. So they both uses Trans but one is actually the FICO and this site is the TransU score. Which means it can get pretty confusing it you don't know what U R actually comparing. As U can see the TransU FICO score is much different from the TransU score. Will get even more confusing if  U bring ur EqFax / Eprian into the mix. Conclusing Know ur FActs b4 U complain. I give KreditKarma an A grade BC its free monitoring lol. not the $7/mth the other charge and in my case scores R pretty close lol.

Top Contributor
89 Contributions
185 People Helped

Helpful to 1 out of 1 people

The number of inquiries increased by two on my report. I was talking with a loan officer with Chase Home Loans (they service my loan now) about refinancing. He wanted to run my credit report and I told him that I wasn't ready. He then said that it wouldn't hurt my credit score. I said like a "soft inquiry" since they were already my mortgage servicer. He said "no". He then said there is no such things as a soft inquiry. But, he said that it would hurt my credit score. Consequently, I let him pull my report and my credit score went down 10 points. I assume there isn't a thing I can do about it. Or is there?

Top Contributor
71 Contributions
175 People Helped

Helpful to 1 out of 1 people

I had previously complained about the fact that my credit card company (Citi) showed my debt under "credit card utilization," but they didn't report any limit on that card; that made my credit card utilization abnormally high. I posted this information before and the moderator, who is always very helpful, replied back, stating that you were attempting to address that issue.

It appears that the issue has been addressed; unfortunately, it actually makes my situation worse, rather than better. You can see below how I am negatively affected.

Old system:

credit card debt:$492 credit card util.: 2% letter grade: A

New system:

credit card debt: $0 credit card util.: 0% letter grade: C

I know your intention was to reflect a more accurate picture of someone's true credit score but, in my case, the result has backfired. Any suggestions as to what can be done to resolve this dilemma will be greatly appreciated. Thanks, as always.

Top Contributor

Reply by
frugal1

71 Contributions
175 People Helped
Helpful to 1 out of 1 people

I would do that but Citi card does not show any balance I have.  They just show my limit; this screws up my utilization. With or without a balance, Citi would show my utilization as 0%, because they don't report any balance; just my credit limit.

1 Contribution
12 People Helped

GIve me a break

Helpful to 12 out of 14 people

Useless information unless you tell us what scoring system you are using.

Reply by
JustinTW

7 Contributions
48 People Helped
Helpful to 14 out of 14 people

CreditKarma uses the TransRisk model, based off of the TransUnion credit report.

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