By ANNA TRINH
If you check your credit scores from multiple places such as Credit Karma, your bank or directly from the bureaus, you may have noticed that your score isn't the same across the board.
Your TransUnion and Equifax scores on Credit Karma might even be different, but that's actually quite common. Receiving different scores can understandably cause some confusion, especially if you've verified there are no errors on your reports.
So if your information is correct, why wouldn't your scores be the same? There could be many reasons, but here are three main reasons you may see a different score.
1. Your scores can vary by bureau.
You may have noticed that the two scores you see on Credit Karma can sometimes be different. Credit Karma pulls your credit information directly from TransUnion and Equifax, two of the three major credit bureaus. If you've checked your Experian score elsewhere, you might have received a score that was different than your TransUnion or Equifax score. There are a few reasons why your score can vary from bureau to bureau.
- Lenders don't always report to all three credit bureaus. It's possible that one or more of your lenders don't report to all three credit bureaus; they may report to only one or two of the credit bureaus or may not report to any bureaus at all. This could explain why you'll sometimes see one account on one or two of your credit reports, but not on the other(s). If some of your reports list some accounts but not others, this can mean that your utilization ratio or your age of credit might vary slightly between those reports, which can affect your score.
- Bureaus can update scores at different times. Credit scores can change pretty often. A credit score is calculated when a credit report is requested by you or a lender. Your score may change when your lenders report new information to the bureaus. Jeff Richardson, vice president of public relations at VantageScore, says, "Since a score is based on frequently updated credit files, it may vary over time."Lenders typically report new information to the bureaus once a month. However if you have multiple lenders, it's possible that the bureaus are getting new information about different accounts at differing times over the course of a month. For example, your mortgage lender may report your payment status to the bureau on the first of the month, while your credit card company may report your status to the bureau on the 10th of the same month.
- Credit bureaus can use multiple scoring models. Each credit bureau may use different scoring models, such as VantageScore or FICO. Furthermore, they could even be using different versions of VantageScore or FICO that may give different weights to different credit factors. This can explain why the TransUnion credit score you received from your bank may be different from the score you received directly from TransUnion.
2. Your scores can vary depending on the scoring model being used.
The two scoring models that are most commonly used by lenders are FICO and VantageScore. VantageScore was developed by the three major credit bureaus to try to provide more consistency in accurately evaluating consumers and predicting their financial behaviors. Credit Karma currently provides VantageScore 3.0 scores from TransUnion and Equifax.
Differences and similarities between FICO and VantageScore
- The VantageScore model uses six factors to calculate your score while FICO uses five. VantageScore and FICO use similar factors to generate a credit score. Both scoring models will consider your payment history, your utilization ratio, your age of credit, your types of credit and any new credit inquiries. In addition to these, VantageScore also considers your total available credit limit.
- The VantageScore model can generate scores for people with fewer than six months of credit history while FICO requires at least six months of credit history. VantageScore can calculate a score with as little as one month of credit history, which can be helpful for people who have recently begun establishing credit or for those who haven't used credit recently.
- Types of late payments are weighted differently on VantageScore whereas FICO puts equal weight on all late payments. For example, a late mortgage payment can hurt your VantageScore credit score more than a late payment on your credit card.
- VantageScore and FICO Score's loan-shopping window is different. If you're in the market for an auto loan or a mortgage, you can loan shop to compare and get the lowest rates. VantageScore typically will count multiple hard inquires made while loan shopping as one inquiry as long as the inquiries are made within a 14-day period. FICO on the other hand typically will consider loan shopping inquiries as one inquiry as long as they're made within 30 days.
- The VantageScore 3.0 model as well as FICO's Score 9 model don't factor in paid collections. This means that if you have a collection account on your report with zero balance, it won't affect your score. This can be really helpful if you have a collection account on your report and you're waiting for it to fall off (which can take up to seven years). However, not all lenders are using the newest iteration of FICO or VantageScore, so it's possible that a paid off collection account can still impact your score as well as a lender's approval decision.
3. Your scores can vary depending on what type of credit you are applying for.
If you're applying for a mortgage, the credit score calculated for that would likely be different than the credit score you would see if you were applying for an auto loan.
Lenders can pull your scores from as many of the credit bureaus as they'd like. You're unlikely to know if they're using just one score or a combination of two or more of your scores, which scoring model they are using, or if they're using a formula that they created themselves.
Lenders may also purchase industry-specific scoring models, such as a FICO Auto Score or the FICO Bankcard Score which can provide them with more information about a consumer's behavior relative to that industry. These models can provide scores that are calculated using a particular industry's unique requirements.
There are a number of reasons your credit scores might be different, and sometimes it's not a direct result of any action you took.
If you verified that the information on your credit reports is correct, don't be alarmed if your credit scores vary between bureaus or even within the same bureau.
You can instead focus on aspects of your credit that you do have control over, such as making on-time payments and keeping your utilization low. These two factors are generally weighted more heavily in both VantageScore and FICO's scoring models, so staying on top of these will likely have a positive impact on your credit health in the long run.
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