Understanding the Differences Between Your Credit Scores
When it comes to getting loans at the best interest rates, maintaining a good credit history is vital. At the center of each credit report is your credit score. While credit bureaus use similar scoring systems, your score can actually differ from one bureau to another. To understand credit scores, you need to know what determines your numbers and why they may vary.
What is a TransUnion® Credit Score?
A TransUnion® credit score has a value between 300 and 850. As with all credit scores, the higher your score is, the better your rating. There are five factors that determine what your score will be, but not all of these factors have the same effect on your score.
Your payment history has the highest impact. If you regularly make timely payments, your score would be higher than a similar person who has missed payments, made payments late or defaulted on a loan.
The second most important factor is the amount you currently owe. Someone with a lot of debt will have a lower score than a similar person who owes relatively little.
The third highest factor is the length of your credit history. Someone who has recently obtained his first credit card or taken out his first loan will score lower in this area than someone who has managed his credit successfully for several years.
Here’s a breakdown of the influence each factor has on your credit score:
- 35% payment history
- 30% amount owed to lenders
- 15% the length of your credit history
- 10% the types of credit accounts you have
- 10% new credit accounts
Note that your income, age and marital status are not factored into the equation that determines your credit score.
How Do Other Scoring Systems Differ?
Although they are similar, other credit bureaus may use different scoring systems. They may use the same numbers of 300 to 850 with the same weighting system, or they may be ranked from 330 to 830 using a slightly different weighing system.
Why Would My Scores Be Different Between Credit Bureaus?
Your credit score should not vary significantly from one credit bureau to another. However, it’s not uncommon to find the numbers don’t always match up. Aside from using different weighing formulas, credit reports may be gathered from different dates. Another factor is that not all lenders report to all three of the major credit bureaus. Some lenders may report only to two, one or none at all. So if you have a stellar credit history with a particular lender, this won’t be reflected in your score if it wasn’t reported.
Why Would My Score Be Different With the Same Bureau?
Lenders who request your credit history don’t always receive the same report as you do. Credit bureaus often work with lenders to ensure they receive the information the lenders feel is most appropriate. So if you apply for credit with the bank, they may receive a different report than what an auto dealership gets. Similarly, if a landlord requests your credit report, he may get a report that has been customized for landlords.
How Do I See My Credit Scores?
You’re entitled to receive a free credit report from each of the three major credit bureaus once every year. To access them, go to TransUnion.com.
At TransUnion, we believe in Information for Good. Whether it’s creating web-based financial products or sharing expert tips, insights and news on our blog, our mission remains the same: putting powerful tools and resources in your hands to help you know your credit, protect your identity and more effectively manage your financial picture.