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Ask Stacy: Why Are My Credit Scores So Different?

When you think of a credit score, you probably think of it as something consistent, not something that differs depending on who’s computing it. Check out this question:

How can this possibly be? I got my credit report and paid for my scores. TransUnion had my score at 700, Equifax at 691 and Experian had my score at 622. How can Experian get away with being 69 points off one and 78 points off on the other score? Thank you very much for your insight to this question.
- M

Actually, M, it’s worse than you think. Not only do the big three credit reporting agencies have different scores, there are actually dozens more variations floating around out there, most of which you’ll never see.

According to John Ulzheimer, who used to work for credit reporting agency Equifax and now blogs about credit, there are actually 49 distinct FICO credit scores.

That’s because Fair Isaac, the company that created the most widely used credit scoring formula, the FICO score, has many variations of the calculation. As you’ve discovered, different credit reporting agencies reach different conclusions based on slight variations in the FICO formulas they use. There are also different scores for specific loan types.

Confusing? You bet. Here’s how The New York Times explains it:

So there are three versions of the basic score [at Equifax, Experian, and TransUnion], just for starters. But FICO also has several other versions, customized for the specific type of loan in question — say, an automobile loan, a mortgage or a credit card. Each is also offered by the credit bureaus, under their own brands. And each version may have multiple releases, as FICO’s formula for crunching the data is updated. So you can see how the versions pretty quickly add up to nearly fifty.

If it sounds unfair to pay for something that doesn’t offer a definitive conclusion, you’ll be happy to know that the Consumer Financial Protection Bureau agrees. They released a report about the issue last summer, saying, “It is likely that the credit score that the consumer receives will not be the same score as that purchased and used by a lender to whom the consumer applies for a loan.”

The CFPB report raises other issues stemming from having dozens of score variations: What if a lender uses a different (non-FICO) scoring model than the one you paid for? What if the lender gets your score from a different credit bureau than you do?

“It is also possible that a consumer and a lender could access different reports from the [same credit reporting agency],” the CFPB says, “if they were to use different identifying information about the consumer.”

The imperfect solution

If life were fair, you’d be able to see your score for free, the same way you’re now able to see your credit history free at AnnualCreditReport.com. And that score would be the one all lenders see and would remain consistent among the credit reporting agencies reporting it.

Instead, you now pay close to $20 to see just one credit score, while there are others you’ll never see. And as M has discovered, your score might vary radically depending on who reports it.

M is right to be upset that one company finds him an excellent credit risk while another judges him as marginal. What happens when he applies for a loan and a lender sees three different scores? One lender might average all three, another might use the middle one, and another might use the highest or lowest. And as I pointed out above, some lenders might use an entirely different model and ignore all three.

What’s a borrower to do? The best you can. While there may be dozens of different scores, there’s one thing that’s consistent: They’re all based on your credit history. And that’s something you have free access to once annually from each of the big three credit reporting agencies. So take a look at your file, read 3 Steps to Improve Your Credit History, and do what you can to make sure it’s accurate and looks as good as possible.

And if you feel the current system is unfair, M, at least you can take comfort in the fact that you’re absolutely right.

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