Why Credit Scores Are Different

Creditors use your credit score to calculate interest rates, terms and eligibility for credit and loans. Even landlords and insurance companies check credit in many cases. Several factors play into your credit score, including your credit use and history. To complicate the matter, your credit score likely varies among the major credit reporting agencies.

Credit Score Components

The way you use your credit affects your FICO score. Your payment history and the amount you owe weigh in the most on your score. The length of your credit history and new accounts you apply for or open also play a significant role. The variety of credit types is a small factor in your FICO score. Having different types of credit accounts such as credit cards and installment loans looks better to potential lenders.

Credit Agencies

Three main credit reporting agencies calculate your credit scores. Creditors use those scores to determine whether to extend credit to you. While all three agencies focus on the same credit-related activity, the way they use that information to calculate your score varies slightly. TransUnion uses a method called EMPIRICA, Experian uses the Experian/Fair Isaac Risk Model and Equifax calls its formula the BEACON score. The formulas vary slightly among the three agencies, resulting in different credit scores.

Data Differences

The slight formula differences aren't the only cause of credit score differences. The information reported to the agencies may vary slightly. This means one credit agency might take into account a credit-related activity while another doesn't have record of the event. Your credit score fluctuates as new credit information is reported so it is possible that one agency would receive new information before the others. Your score might change with that agency but stay the same with the others.

Errors

Some consumers end up with errors on their credit reports. One agency might reflect an error on your credit report that affects your score. Request copies of your credit report from each agency to compare the data and look for errors. If there is an error, get it corrected for a more accurate score from the reporting agency.