Why Do Credit Scores Vary So Much Between Bureaus?

If you've ever received copies of your credit history from the three main credit reporting agencies--Equifax, TransUnion and Experian--you've noticed your credit reports most likely have different scores.

Vying for Business

The three main credit reporting bureaus are competitors. Each bureau bills itself as having the consumers' definitive credit report. These reports are basically a composite of the consumer's financial life--spending, bankruptcies, debts. For the bureaus, it's not in the other's interest to have the same scores. Although the differences are academic to the consumers, to lenders the credit reports are worth millions of dollars and ultimately determine how much risk these lending companies can take on.

Different Methods

The three main credit reporting agencies also use different methods to compile their credit reports. While based on the same model, all three agencies use different software in credit reporting. The mathematical algorithms are secret, but the credit scale is not: The scores range from 300 to 850, with 850 being top-of-the-line borrowing power. Because credit scores for some consumers can vary favorably as much as negatively, the agencies and many consumers oppose standardization of credit reporting.