Why Do I Have Three Credit Scores?

Most people do not know what a credit score signifies, according to the Consumer Federation of America. Add into the mix three different scores from the major national bureaus and figuring out your risk calculation can be nerve-racking. However, this is normal and you have different scores from the three credit bureaus due to variance in their databases.

Identification

The major credit bureaus -- Experian, Equifax and TransUnion -- control almost all of the consumer credit reporting industry in the U.S., but they are three separate companies, so they do not trade information amongst themselves. The bureaus use slightly different scoring formulas, but they are all based on the FICO formula from the Fair Isaac Corporation. The lack of some data, such as a collection account or trade line, can lead to a 50 point or maybe more difference in scores.

Considerations

Lenders probably pull credit reports from all three agencies on a customer, so they are well aware of variations in scores. How lenders handle this is up to them. Some creditors may take the highest score, the lowest score, an average of the scores or disregard your scores all together and use a completely different formula, according to Experian.

Different Names

Only the Fair Isaac Corporation can sell a FICO score, because it owns the trademark to the name. The major bureaus have no relation to FICO, but they frequently do business with each other. Thus, Equifax calls its FICO-based score a BEACON calculation, Experian has the Experian score and TransUnion has the EMPIRICA.

Effect

You can have an OK score with one bureau and an excellent credit score with another. Most lenders require a FICO of 760 or better to get the best rates. If one of the bureaus misses a few good payments, you score could drop below 760 with that bureau and raise the rate on your loan.

Tip

Initiate a dispute with the credit bureaus if they list anything in error on your report, such as a charge-off that does not belong to you or a missed payment, but also accounts in good standing not there. You can try to get the bureaus to add an account to your file if you have ample evidence, such as statements and canceled checks, but they are free to ignore your request.