Thanks to the Fair Credit Reporting Act, you’re likely familiar with the three major credit reporting agencies — Equifax, Experian and TransUnion. And you’ve also likely deciphered that you have more than one credit report, given that laws entitle folks to a free one from each bureau every year. (You can get these reports over at AnnualCreditReport.com.)
You may also know that each report can often contain different information. Not every lender reports to all three bureaus— it can get too expensive. Those discrepancies can easily cause one credit score you’re looking at to vary from another. But it can get confusing when you pull your credit reports, realize they mirror each other line by line and yet you see different scores. One commenter recently found themselves faced with such a puzzle.
“What I don’t understand is if all my info is the same at all three reporting agencies, why aren’t all the scores the same?” they wrote.
Let’s break down the answer.
So Many Credit Scores
Just like there are different versions of your credit reports, there are also many, many different versions of your credit scores, calculated, too, by various credit scoring models. Let’s consider one of the most well-known credit scoring models, FICO, as an example, since our commenter went on to ask about it specifically.
FICO alone has over 50 versions of its general risk score. There are older models vs. newer models — for instance, FICO 8 vs. FICO 9 and the newly introduced FICO XD. There are models designed for specific lenders: mortgage vs. auto loan vs. credit cards, for instance. And then there are versions of those scores plus a base model designed specifically for each major credit bureau. And, yes, those different models — and their associated algorithms — can treat your credit report data differently.
FICO 9, for instance, treats medical debts differently than the previous incarnations by excluding paid medical collections from scores — as does the newest version of VantageScore, another well-known credit scoring model, whose VantageScore 3.0 also happens to ignore all collections, paid or unpaid, under $250. And those aren’t the only differences across algorithms. The aforementioned FICO XD, as way of another example, is designed to incorporate phone, cable, utility payments and public records when calculating scores in order to help lenders assess consumers who may not have a traditional credit history but have a strong record of paying non-credit accounts.
All this essentially means is that, depending on what score you are looking at — or your lender is using — it’s possible that the numbers will be different, even if all the information on your credit reports is the same.
Understanding Your Score
There’s no need though for all of these nuances to make your head spin too much. While there are variations from score to score, the major building blocks of every credit scoring model are pretty much the same. They all evaluate your payment history; credit utilization (the amount of debt you owe vs. your total available credit); credit age; mix of accounts and credit inquiries. So, in lieu of fixating on the number before you, focus on what’s driving it. Most credit scores come with information about certain risk factors that may be impacting your credit and addressing specific issues — like high credit card debts or a thin credit file — can help your scores improve across the board.
It can help, too, to track a single score over an extended period of time to see how your behaviors are impacting your credit. (You can view two of your consumer credit scores — one from Experian and one from VantageScore — for free each month on Credit.com.)