Why Do I Have Different Credit Scores?
Learn why your credit scores often differ depending on the source. Get clear insights into the complex factors behind these variations.
It can be confusing to see different credit scores reported by various sources. Understanding the factors that contribute to these discrepancies clarifies why different scores exist and which score truly matters. This article explains the primary reasons behind varying credit scores, helping to demystify this common financial experience.
Understanding Different Credit Scoring Models
Multiple credit scoring models exist, primarily FICO and VantageScore, each developed by different companies. These proprietary algorithms predict the likelihood of an individual defaulting on a loan within a specific timeframe, typically 90 days past due within 24 months. While both aim to assess credit risk, they utilize unique formulas and weigh various credit factors differently.
FICO scores, for instance, typically consider payment history as the most influential factor, accounting for about 35% of the score. Amounts owed, or credit utilization, is also highly significant at around 30%, followed by the length of credit history (15%), new credit (10%), and credit mix (10%). VantageScore models prioritize payment history (around 40%) and group other factors like credit utilization, balances, and available credit under a broader “amounts owed” category. These differing weight assignments mean that even with identical underlying credit data, the calculated score can vary between the two models.
Beyond weighting, FICO and VantageScore have different criteria for scoring consumers with limited credit history. VantageScore, for example, can generate a score with as little as one active tradeline, regardless of its age, or even with external collections or public records. FICO generally requires at least one open account that is six months old and has been reported to the bureaus within the last six months to generate a score. These distinctions allow VantageScore to score more of the adult population.
The Role of Credit Bureaus and Their Data
The three major credit bureaus—Experian, Equifax, and TransUnion—collect and maintain consumer credit information. These bureaus receive data from various sources, including banks, credit unions, and lenders. The information collected includes account balances, payment history, credit limits, and account status.
A significant reason for differing scores is that the data held by each bureau can vary. Creditors are not legally required to report to all three bureaus; some may report to only one or two, or none at all. This means your credit history might appear incomplete or different across the three credit reports. For example, a specific account might only be visible on your Experian report, but not on your Equifax or TransUnion report.
The timing of data updates also differs between bureaus. While many creditors report monthly, the specific day they report can vary, leading to slight discrepancies in the most current information. Minor data entry errors or reporting inconsistencies from creditors also contribute to variations in credit reports. Therefore, even if the same scoring model were applied, the score could differ because it is based on distinct data sets from each bureau.
Specific Score Versions and Industry Tailoring
Beyond the fundamental differences between FICO and VantageScore models, numerous versions exist within each, contributing to score variations. FICO, for instance, has developed versions such as FICO Score 8, FICO Score 9, and FICO Score 10, with FICO Score 8 widely used by lenders. These versions are periodically updated to incorporate new analytics, reflect changes in consumer behavior, and leverage new risk prediction technology.
Lenders frequently utilize industry-tailored scores, specialized versions optimized for particular types of lending decisions. Examples include FICO Auto Scores, FICO Bankcard Scores, and FICO Mortgage Scores. These industry-specific scores are built on the same foundation as base FICO scores but are fine-tuned to emphasize credit factors most relevant to that industry. For instance, a FICO Auto Score might place greater weight on past auto loan payment history, while a FICO Bankcard Score focuses more on credit card usage.
The score ranges for these tailored versions can differ; while base FICO scores typically range from 300 to 850, industry-specific FICO scores can range from 250 to 900. Lenders select the model and version they believe best assesses risk for their loan products. This means when you apply for different types of credit, lenders may check different score versions, leading to varied scores.