It has always been said that you should check your credit reports regularly to ensure that all information on them is correct. If you have purchased your credit reports before, you may have noticed that the three agencies that monitor your credit score all have different credit ratings for you.
Why is this so? Below are several reasons why the ratings between the three reports can be so different. First, check each report thoroughly to make sure that all the information is correct.
There may be something wrong in a report that could affect your credit score with the respective monitoring agency. If one agency has incorrect information about your credit history, that credit report would be different from the others. Make sure that you correct any inaccurate information to get the correct rating.
Another reason why ratings may differ between the three reports is that each agency has its own formula for determining its ratings. Even though Experian uses the standard FICO score, it also adds some factors of its own.
TransUnion uses its own proprietary scoring system and Equifax uses the standard FICO scoring model and . Another possibility is that your credit cards do not report to all three credit monitoring agencies.
Be sure to check that all reports contain all the information needed to set your credit score correctly because if only one credit report receives information from your credit cards, it would reflect a different rating than the other two reports from the monitoring agencies.
It may be that a portion of the information reported to the credit bureaus is not provided to all three at the same time. One credit bureau may have received the information from one company, but the other two credit bureaus may not have received the information yet. The credit ratings would then vary widely until the other two agencies receive the same information.
To protect your credit score and allow you to qualify for low-interest loans, make sure that each report contains the same information so that your credit score can be rationalized and you don’t get shocking declines when it’s time to process your credit application.
It is good to make a notation that all three reports are unlikely to have the same score – even if all three have the same information. Because different watchdog agencies use different factors and numbers to evaluate your credit habits, it would be impossible to waste your time trying to make sure that the scores are exactly the same.
An important item to worry about is maintaining your credit score and making sure that the information on each report is correct. If you have kept your credit score positive, then the ratings will reflect that, and the lenders who rate the reports will agree that you are a good risk to lend money to.