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. 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.

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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3 Contributions
4 People Helped

Helpful to 1 out of 1 people

My CK score started out at 589 about 6 months ago.

I got a prepaid Capital One card and within a couple of months my score went up to 609 and eventually 618 where it is now.

I recently had my credit pulled in order to buy a house and my actual FICO is 676.

High enough to qualify for a mortgage.

I had known from this article that there was a difference between the different credit reports.

My Experian score is now 665 by way of Credit Inform, which is a service from Capital One.

It started out at 634.

My Equifax score last month was 632. I had to purchase that one.

Since there is a large difference between the scores,

don't get discouraged with a low CK score.

It seems to be the lowest of the 3, so it you can get it to improve, the other scores will be substantially higher.

1 Contribution
40 People Helped

Karma Scores

Helpful to 40 out of 46 people

I would like to know which score karma represents..... I enjoy the free look, but I really dont know where I stand...

Reply by
jakemurphy2

1 Contribution
43 People Helped
Helpful to 43 out of 50 people

I would like to know what each company lists as my credit score.

Reply by
SUBSAYLOR

1 Contribution
11 People Helped
Helpful to 11 out of 15 people

Honestly, I dont know what **** score I have...they are all different by 20 points...

9 Contributions
93 People Helped

Stay Tuned. Ranges on the Way

Helpful to 42 out of 50 people

As soon as we move out of beta, we will be providing the complete distribution of our credit score against both the nation and the our user base. Our beta was designed to capture how this score compares against other scores.

Reply by
pjtaylor814

2 Contributions
38 People Helped
Helpful to 36 out of 45 people

This article says squat!!! All scores on my report are going up, then suddenly, my vantage score drops..??? Why would my vantage score drop, at the same time as my credit score goes up??? lost 5 points on vantage score, but my other credit scores went up... who figures this ****??? no wonder we people can never get it right, they keep changing the **** rules every other day... a few years back, we bought a house with a 628 score, now we can't buy a soda ... WTF... they just want to screw you at every turn... Thanks AMERICA,,

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65 Contributions
135 People Helped

Helpful to 1 out of 1 people

i agree with most everyone else on this forum. does credit karma simply take the credit report from TransUnion and make their own score? because when i applied for a Sallie Mae loan (which i got denied from. not sure if it was because i applied before the whole debt ceiling negotiations or because of my short credit history. probably a good mix of both), apparently my credit score was 733. creditsesame pulls my experian and my score on there is 738. but creditkarma says my score is 689. that's a PRETTY big difference, especially since TransUnion says i have a 733!!!

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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...

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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

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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
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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.

Reply by
rlmartin9

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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!

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Reply by
JohnHoer

90 Contributions
189 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?

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?

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