We get the “Why are my credit scores different?” question a lot. And for good reason: it can be confusing. You check your credit scores with Nav, for example, but then a lender says your score is different. Or you get your credit score from one website and then another, and the two are different.
There are 4 main reasons why your scores may be different, and we’ll explore them in more detail here:
- Bureau: Scores are obtained from different credit bureaus
- Source: The company that developed the credit score is different
- Model: The credit scoring model used is different
- Timing: Scores are pulled at different times
And then we’ll answer the question, “What’s my real credit score?”
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1. Bureau: Scores are obtained from different credit reporting agencies
The first thing to understand is that there are three major credit reporting agencies and two companies that create credit scores—mainly FICO and VantageScore. And, neither FICO nor VantageScore have any information about how consumers handle their bills. Instead they provide the formula used to evaluate the information in a consumer credit report. And that information comes from one of the three main consumer credit bureaus:
While consumer credit reports are usually similar across all three platforms, these credit reporting agencies don’t share information with one another and it is possible there are differences. For example, a collection account may appear on one of your credit reports and not another. That’s why it is a good idea to review your credit reports with each of major credit reporting agencies. You can do this at AnnualCreditReport.com, the federally mandated free credit report website.
Learn more: Experian business credit report
2. Source: The company that developed the score is different
FICO scores are the most commonly used credit scores. FICO (formerly Fair Isaac Company) started creating credit scores in the late 1950s.
In 2006, the VantageScore was created as a joint venture among credit bureaus Experian, Equifax, and TransUnion to compete with FICO scores.
In addition, each of the credit bureaus may create their own proprietary credit scores. Sometimes these are used by lenders, and other times they are “educational credit scores” offered to consumers, but not used by lenders to make credit decisions.
Finally, financial institutions may create their own proprietary scores that are not available to the public. They may use information from one of the credit reporting agencies but also customize the score to their customer base. These are often referred to as “custom scores.”
Each score is intended to measure a certain type of risk of a borrower based on information in their credit report. But each one may approach the analysis in a somewhat different way. That means you can get your credit score from the same bureau the same day and the actual number may be different depending on whether it’s a FICO score or VantageScore.
3. Model: The credit scoring model used is different
There is no single FICO score. These scores are updated over time, and some credit scoring models are used for specific types of lending such as auto loans or bank cards (general purpose credit cards.) This chart from MyFICO.com illustrates different credit scoring models most commonly used (FICO score only):
As you can see, different scoring models may be used by mortgage lenders, auto lenders and card issuers. You can also see how different models are available through each bureau. For example, for mortgage lending, lenders are likely to pull a FICO Score 4 from TransUnion, a FICO Score 2 from Experian, and a FICO Score 5 from Equifax.
VantageScore, by contrast, has four versions and 4.0 is the latest version. If you are using a credit monitoring service to view your VantageScore, you may see a VantageScore 3.0.
- Payment History (35%)
- Debt Utilization (30%)
- Credit History/Credit Age (15%)
- Credit Inquiries/New Credit Checks (10%)
- Types of Credit (10%)
These factors are included in most credit scoring models, but the weight they carry (in other words, how much they impact your scores) varies by scoring model.
Payment History: Late payments hurt your credit scores. The more recent the late payment, the more it affects your scores and the greater the number of late payments, the more they affect your scores. (A recent late payment can drop your score as much as 100 points!)
With FICO scores, this factor generally makes up around 35% of your score.
With VantageScore 3.0, it’s the top factor but with VantageScore 4.0 it’s “moderately influential.”
Debt: Revolving debt is also a substantial factor. There are different ways this factor may impact your scores. With FICO scores, this factor commonly looks at “debt utilization” “credit utilization” or “debt usage” (all terms for the same concept.) It compares your credit balances to your credit limits on your revolving lines of credit such as credit cards. For example, if you have a credit card account with a $5,000 limit and have a $1,000 balance, your utilization or debt usage ratio is 20%. (Balance divided by credit limit.) This is measured both for individual accounts and as an aggregate ratio of all revolving accounts. Higher utilization ratios may impact your credit negatively. This factor is one that can change quickly: pay down a high credit card balance and your credit scores may improve as soon as the new balance is reflected in your credit reports.
With FICO scores, debt usage typically accounts for about 30% of the score.
With VantageScore 3.0 debt usage accounts for about 20% of the score, while total balances/debt accounts for about 11%. With VantageScore 4.0, total credit usage, balance and available credit are together the top factor considered “extremely influential.”
It’s worth noting that some business credit cards report to the owner’s personal credit, which means that high balances due to business activities can impact the owner’s personal credit.
Types of Credit: Credit mix or credit diversity in terms of the types of accounts. If your credit report shows that you have a few credit cards, a car loan, a student loan, and a mortgage, for example, you will likely have a higher credit score than someone who only has one credit card and a personal loan.
With FICO scores, credit mix accounts for roughly 15% of your credit score.
With VantageScore 3.0 age and type of credit together account for about 20% of the score, and with VantageScore 4.0 credit mix and experience are the second most influential factor, considered “highly influential.”
Credit History/Credit Age: Credit age simply indicates how long you’ve had credit and is measured by looking at your oldest account, youngest account and the average age of all your credit accounts. The older your credit, the better.
With FICO scores, this factor accounts for roughly 10% of your credit score.
With VantageScore 3.0 age and type of credit together account for about 20% of the score, and with VantageScore 4.0 age of credit is the next to last factor, considered “less influential.”
Credit Inquiries/New Credit Checks: New credit takes into account newly opened accounts and requests for your credit reports/scores – a.k.a. “inquiries.” Hard inquiries typically drop scores by 3-5 points though that range can vary slightly. While inquiries stay on your credit for two years, they typically only affect your scores for one year.
Not all inquiries affect your credit scores the same way, so make sure you understand how inquiries work if you are concerned about this factor.
With FICO scores, this factor accounts for roughly 10% of your credit scores.
With VantageScore 3.0 it’s around 5% and with VantageScore 4.0 it is the least influential factor.
FYI: Checking your credit scores with Nav is a soft inquiry and absolutely does not impact your personal or business credit scores. In addition, most lenders evaluating applications for small business loans often use a soft credit check on the owner’s personal credit initially. If the owner decides to proceed with the loan there may be a hard credit check.
As you see from this description of the score factors, the same information may have a different impact depending on which credit scoring model is being used.
4. Timing: scores are pulled at different times
Credit reports are updated all the time. A credit score is created based on current data from the credit reporting agency that was used to create the score. Because credit reports are real-time, it is possible for your credit score to change from one minute to the next depending on what is being reported. For example, if you have paid your credit card bill and as a result, your revolving credit balance has dropped significantly, your score can change as soon as that new balance hits your credit reports. In this example, it is possible to see a significant score change depending on how much debt has been paid off.
Note: credit scoring models are moving in the direction of “trended data” which will take less of a “snapshot” approach and instead also take into account how a consumer’s credit data has changed over time.
Which score is my real score?
It’s logical to wonder which score is best. The answer, though, is that the only score that really matters is the one the lender uses to evaluate the loan you want. Typically you won’t know which particular consumer reporting agency or scoring model the bank, credit union or other type of lender will use to make a lending decision. (In a few cases, such as a mortgage application, the lender will obtain multiple credit scores from different bureaus.) So your best approach is to understand the main scoring factors and work to make each as strong as possible.
What’s a good credit score?
Most consumer credit scoring models run from 300— 850 though there are some used less often that have a different score range. Each lender determines which range is acceptable, and which score ranges help a borrower qualify for the best terms. So again, there’s no single score that’s considered “good.” However, myFICO offers a credit score calculator that helps you understand the average interest rate by credit score range. If you are shopping for a consumer loan, it can be helpful.
As you can see, the answer to the question “why are my scores different?” can be complex. The bottom line is that you should make sure the underlying credit information is correct on each of your credit reports, no matter where you obtain them. Having the right data reported is what is important. That’s why it is critical to monitor and understand the information being reported on your credit reports.
Make sure you’re taking advantage of monitoring your free credit scores and credit reports so you know what your reports say. (And make sure you’re checking with all the major credit reporting bureaus.) Since you can get your credit scores for free, there’s no excuse! Keep in mind that a credit freeze may inhibit your ability to check your reports or scores from certain sources.
Staying on top of your credit using the resources listed here can not only help you find discrepancies before they negatively impact your credit, but it can also help you build credit and get the financing you need.
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