Have you bought a 3-in-1 credit score or checked your scores from various sites in a day? You have probably noted that the value differs among the bureaus and the sites. Are you wondering, ‘how to raise my credit score’? Maybe you don’t understand the concepts behind these scores and now the different values from different credit-checking companies are confusing you even more! Fret not, because it is not an error. There is an explanation for it.
Understanding credit score ranges
Your credit score is a measure of your creditworthiness. Popular scores range from 300 – 850 points. Higher value means better creditworthiness. The truth is there is nothing like the best or the worst score. They are simply different and lenders normally use different scores. Some scores are just for educational purposes and they are very rare. Such scores are used by lenders to make credit decisions.
Type of credit scoring company
Lenders normally establish strong relationships with a certain credit bureau and forgo the rest. You should ask your lender which bureau they have used to assess your score. Depending on their principles, they might tell you or not. However, you cannot command them to use a particular bureau when determining your creditworthiness. Many times, lenders and top credit repair companies use FICO score- Fair Isaac Company. There is another company known as the VantageScore 4.0 but it is rarely used. It might take time before VantageScore 4.0 is available to all lenders. Moreover, not so many providers can switch to new models so easily.
Different scoring models
Credit bureaus do not employ similar scoring models and that is why each produces a different value. FICO is the most popular company and it uses its own scoring methods. Banks, car sellers, credit card issuers, mortgage brokers, and other agencies employ different scoring methods too. FICO and the 3 credit bureaus regularly change their scoring model versions although the adoption of those new methods takes a lot of time. As such, the old scoring models dominate. Credit scores are synonymous with thumbprints so there is no way two scoring models can be the same. Due to periodical modification of the scoring models, the versions of the FICO score keep changing.
If your car is repossessed or you miss a mortgage payment, the FICO score has to account for that. Another scoring company will do the same but the two will be weighed differently. Even though the scores differ, they are dependent on your credit report. If you didn’t know the easiest way to fix your credit score, consider focusing on the information that is on your report so you can improve on what needs to be improved.
Different credit report data
Credit bureaus collect credit information differently and they never share it with similar companies. Moreover, your lenders might have reported your information only to one credit bureau. As such the TransUnion, Experian, and Equifax reports will differ significantly depending on the data used. This data is then used to calculate credit score. It is, therefore, possible to have an account on the Experian report which is not present in the TransUnion report. This means that the later might yield a higher credit score.
Now, do you see why you are getting different credit score values from the three credit reporting agencies? Also, you need to understand that the scores from different dates cannot be the same. We recommend that you review your score regularly to check for errors which might be negatively affecting them. Finally, learn how to build credit with a credit card and good money spending habits.