Why Is My Credit Score Different At Each Of The Credit Bureaus?

Online, January 31, 2012 (Newswire.com) - The three major credit bureaus - Experian, Equifax and TransUnion - are all different yet they all share more similarities than differences. So why is it when you get your credit reports from each of the bureaus, you have a different credit score from each one?

First of all, you should understand how credit scores are derived within each of the credit reporting bureaus. A mathematical formula will calculate your score by taking the information from your credit history and compare it to the credit history of others. The information used includes whether you've paid your bills on time and your revolving credit. The scores differ mainly because each of the credit bureaus will have slight variations on the information they use to calculate your score - in other words, what's reported at one bureau may not show up on another bureau's report.

Credit scores range from 300 to 850. The higher your number, the better your credit. Your credit score is important because it is essentially a snapshot of you, financially speaking. It's also important because it is used by lenders when you apply for credit, and those lenders use it to determine whether you are credit-worthy.

Some of your creditors may not report your accounts to all three credit bureaus. This is also a factor. Each credit bureau offers two scores: a FICO score and a consumer credit score. The consumer credit score is calculated by each bureau using its own formula. The FICO score comes from the Fair Isaac Corporation.

If you are applying for any type of loan, a lender will pull your credit report. If a lender gets your credit score from anywhere other than the three credit reporting agencies, that score will also be different, and will be somewhat less accurate, since it will be an estimated score, rather than actual.

It's important to note that credit bureaus only know what your creditors report. Some creditors are diligent in their reporting, while others report infrequently at best. This can also factor into the differences in your scores.

Credit bureaus are obligated by law to update and maintain your credit history. But it should be noted that with millions of records to manage, there are sometimes errors. There is also a very real possibility that when thing are corrected or settled, it may be a while before your report is updated.

This is why it is important for you to check your credit report frequently to ensure that all the information posted is correct and up to date. Credit bureaus are required by the Fair Credit Reporting Act to verify information for accuracy and to remove it when appropriate.