Why are my credit scores different at all 3 credit bureaus?

When it comes to credit, financial experts constantly talk about how to check your credit report and the importance of knowing your credit rating. However, many people don't understand exactly what it means to do a credit check. When checking your credit, there are many things you need to know. One important part of checking your credit is to understand the three major credit bureaus in the U.S. and how they differ from one another. These three agencies are Experian, TransUnion, and Equifax. When trying to determine your credit score, you need to look at all three of these credit bureaus so that you can get the most complete picture of your financial health.

Understanding the Difference

While all 3 credit bureaus use the same FICO scoring system to determine your credit score, they don't always produce the same number. There are many factors that go into determining a credit score. Some of these factors include:

• Your personal information
• The age of your credit accounts
• Your payment history
• The amount of debt you have

When you get your credit reports from the three different agencies, you may immediately wonder, “Hey! Why is my credit score different?” The scores are sometimes different because the three agencies might not receive all of the same information at the same time from all lenders. One bureau might have older information while another bureau might report a payment you made just a few days ago. It's also possible that one report might contain an error. Since the three bureaus collect information at different times, the reports will inevitably end up having some differences. However, if there are significant differences between the reports and the scores, then it may be time to be concerned. If you are wondering, “Is it important to get credit reports from all 3 bureaus?” The answer is, absolutely yes, so that you can make sure the three scores are as close in number as possible.

Why All Three Scores Matter

When you go to apply for loans, your potential lenders will pull your credit reports from the three credit bureaus in order to answer the question: what is your credit rating? Your ability to get the best loan will depend on how high your credit score is. Higher credit scores will result in better loan options, and low credit scores may result in high interest rates or even a loan request being denied. Oftentimes, a lender will use your lowest score as the determining factor in the decision to approve your loan. Other lenders may use an average score. Regardless of which method the lender uses, all three credit scores will come into play. Therefore, it's important to make sure you know what your reports say well in advance of applying for a loan.

Getting the Right Score

The main reason it is important to check your credit score with all three credit bureaus is because of these potential discrepancies. If one bureau is showing a low credit score for you but the other two scores are high, then that low score may end up costing you a loan. In order to avoid these differences, you need to make sure you thoroughly check all of the information in the three credit reports. There is a good chance that if one score is much different than the others, then that reporting agency has some inaccurate information. If you wait until you apply for a loan to find out the information is wrong, it will be too late. By taking the time to check your credit report well in advance of applying for a loan, you will have the opportunity to correct any errors. Misinformation on your credit report can be very costly to your score, so you want to make sure that everything is accurate. In the long run, the right credit score will save you a lot of money.

Checking your credit score is an important and smart financial move that many people underestimate. If you check your credit several times each year and pull your report and credit scores from all three credit bureaus, then you will put yourself in the best financial situation possible, especially when it comes to getting loans. When you see your three credit scores, it is important to understand the answer to: why is my credit score different? By looking at all of the information in the reports, you can determine if there are any errors that are bringing down one particular score. Since all three credit reports will be used to determine your loan rates, you need to make sure that everything is in good shape. While your three scores may never be exactly the same, they should be pretty close. If they are high enough, you will get the best loans out there.

Author Bio:

Joy Mali is an active finance blogger who is fond of sharing interesting finance management tips to encourage people to manage their personal finances. More specifically, she advocates that people should check credit reports and scores regularly.