There are a number of different credit score monitoring apps and websites these days. If you use more than one of these services, you may have noticed that your credit score varies each time you check your score. To make it even more confusing, your credit score is likely different when you apply for a loan at your financial institution.
If you can't understand this, you're not alone. Many people wonder, "Why are my credit scores different?" and the answer can be traced to several factors.
Credit Bureaus Have Different Data
There are three national credit bureaus, Equifax, Experian and TransUnion. While most of the information they collect about us are similar, there are differences. For instance, one bureau may have unique information about you, while the other two do not.
Not All of Your Information May Be Reported
All of your credit information may not be being reported to all three credit bureaus. The information in your credit report is supplied by lenders, collection agencies and court records. Don't assume that each credit bureau has the same information.
Timing of Credit Bureau Reporting
Lenders report credit information to the credit bureaus at different times, often resulting in one credit bureau having more up to date information than another. At the same token , they may record, store or display information in different ways. For example, if you paid off an auto loan, your lender will report that to one credit bureau, but the information didn't make it to the other two bureaus at the same time.
Credit Scoring Models Being Used May be Different
Credit bureaus also use different scoring models. There are literally dozens of different credit score models and each of them can give you a different score. Even online tools claiming to use your TransUnion or Equifax score, are likely using a different model than what your financial institution may be using when pulling your credit score from the same credit agency.
How Do I Know What Model My Lender is Using?
Lenders usually have established relationships with one or more of the credit bureaus. You can ask your lender which credit bureau they purchase credit scores from. However, you can't request that the lender use a certain credit bureau to retrieve your score.
Most lenders use the FICO score developed by FICO, the company formerly known as Fair Isaac. You can purchase your FICO score based on Equifax, Experian and TransUnion credit reports from myFICO.com.
Is Checking My Score Really Worth It?
Even though the credit score you're checking probably won't match the score your lender receives, it's still important to check your credit score. Your score will give you a general idea of where your credit stands, that is, whether you have a good credit score or bad credit score. You'll get a good indication of whether you need to improve your credit or if your odds of getting approved for a credit card or loan are in your favor. If possible, review at least one credit score for each of your three credit reports so you have an idea of your complete credit picture. Plus, keeping track of your credit score can help you identify if you have been a victim of identity fraud more quickly.