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Why Do Credit Bureaus Report Different FICO Scores?

We all know a FICO credit score and the credit history it is based on are critical for financing a car, home or getting almost any type of credit. It isn’t very reassuring to discover your credit score is different depending on which credit bureau (Experian, Equifax or TransUnion) it comes from. The FICO credit scoring system is used by all three, so how does this happen? Once you know a little about the credit reporting process it’s not hard to understand. More important, you’ll know what you can do to resolve the problem.

FICO stands for Fair, Isaac, & Co, the company that markets the credit scoring system. The FICO score is a 3-digit number from 300 to 850. A score of 700 or better is good to excellent. Less than 580-620 is considered poor. A score is calculated by using the FICO system to process information reported to a credit bureau by lenders.

There are two problems that may result in credit bureaus arriving at a substantially different FICO scores. The first problem is that the different credit bureaus don’t always have the same information. That information is provided voluntarily by lenders. If a lender sends in a report to one credit agency but not to all three, the data your FICO score is based on will be different.

Second, there may be errors on your credit report. This can happen in a number of ways. For instance, a lender might neglect to report a change in your status (that you paid off a loan on time, for example). There is the possibility of someone using your name and credit in a fraudulent manner. Incorrect information, whatever the cause, can remain on your credit history for years if it goes undetected.

Inaccurate or incomplete information can be a major liability for a consumer. If a lender at one time reported a problem with your account and failed to report the problem was satisfactorily resolved to every credit bureau that received the original report, you could well find yourself denied credit or paying a higher interest rate.

Fortunately the consumer is far from powerless to deal with credit history problems. Under the Fair Credit Reporting Act (FCRA) you are entitled to a free copy of your credit history each year. You can do this online by going to the Federal Trade Commission’ authorized provider at AnnualCreditReport.com or by calling (877) 322-8228. The free report does not include your FICO score. You can easily order a copy of your FICO score from each of the credit bureaus, but you must pay for it. Keep in mind that it’s the content of your credit history that’s important. If your credit history is correct and up to date your FICO score will be the same or nearly so no matter which credit bureau provides it.

Making corrections or reporting possible fraud is another right consumers have under FCRA. To start the process of disputing errors, to report fraud, or to request a security freeze if you believe someone is using your name and credit history, you need only to go to the websites of each of the major credit reporting agencies. Each has online tools for you to use to report and deal with problems.

You can always reach us, should you need assistance from one of our counselors who can assist you in obtaining and understanding a copy of your credit report.