Why Each Credit Bureau Has Its Own Credit Score
Not so long ago, a person couldn't see his credit score from each of the credit bureaus. This information wasn't easily accessible to anyone but current and prospective lenders who used these numbers to weigh the risks of lending to a borrower. All that changed in 1999 when California lawmakers passed legislation that required the three credit bureaus in the U.S. to disclose credit scores to consumers. Now, people are more aware of the roles that credit bureaus play in their finances, but many of them want to know why each one has its own credit score. Well, there are several reasons for this, including:
The data in each credit bureau's files
The credit information on your credit report goes back seven years (a personal bankruptcy stays on your credit report for 10 years), and each credit bureau may have different information that would positively or negatively affect your credit score. So, if one of the credit bureaus has data that you missed a car payment five years ago, the other two may or may not have that data, and your credit score is likely to vary.
Errors on your credit report
Given the automated nature of information, it's almost guaranteed that you will have to contact the credit bureaus at some point to contest an error on one or all of your credit reports. When you swipe your credit card at the grocery store, it is one machine transferring information to another and any one of a number of things can occur that will result in an error. Errors on your credit report are one of the main reasons why you should check it often and use a credit monitoring service to help bring these errors to your attention.
Not all lenders send information to all credit bureaus
It is very important to remember that some merchants and lenders don't send their information to each of the credit bureaus. This is one of the more common reasons for your credit score differing from one credit bureau to the next.
Name variations on credit applications
This is also why the credit bureaus usually have different credit scores for the same person. Think about it this way: Is your name spelled exactly the same on all of your credit cards, utility bills, mortgage, auto loans and other invoices? Probably not. Variations on your name can lead to different credit scores and more important, also lead to someone else's irresponsibility with credit showing up on your report.
These are a few of the many reasons why credit scores may vary between different credit bureaus. Remember to obtain copies of your credit reports regularly, look for errors and proactively contest them with each credit bureau. Be sure to get current copies of your credit reports before applying for credit on a major purchase. A little diligence on your part could save you thousands of dollars over the life of the loan.
Read More About Credit Scores
- How missed and late credit card payments affect your credit score
- Your Credit Score: How Your Credit Cards Influence It
- The Relationship between Credit Scores and Age
- Credit Scores vs. FICO VantageScores
- Why Each Credit Bureau Has Its Own Credit Score
- Medical Bills Don't Have to Ruin a Credit Score
- Chapter 7 or 13 Bankruptcy Can Affect Credit Scores
- Ordering Your Credit Score From a Credit Bureau
- What is a Bad Credit Score?
- Factors That Damage Your Credit Score
- What Is a Good Credit Score?
- Credit Score Myths
- How Credit Scores Are Calculated
- Why You Need to Know All Three Credit Scores
- What Are the Three Credit Bureaus?
- How Credit Scores Affect Insurance Premiums
- Student Habits That Kill Your Credit Score
- Store Credit Card Application Could Damage Your Credit Score
- International Credit Score
- What A Credit Card Balance Does to Credit Scores
- How a HELOC Affects Your Credit Score
- Medical Credit Score
- Your Credit Score May Be Worse Than You Think
- FICO - What is Coming in 2009
- Credit Score Ranges
- Five Parts to Your FICO Credit Score
- How Corporate Cards Affect Your Personal Credit Score
- Who Wants to Know Your Credit Score
- Credit Rating - How Your Credit Gets A Score
- Credit Line and Your Credit Score