Basics,  Credit Scores

Understanding your Credit Score–TIMES THREE!

hand-1006423_1280When most people start on the journey to understand their credit score, they’re usually expecting to have just one number to deal with. You might be surprised to learn that you don’t have just one FICO Score, you have THREE! And they’re all different!

While that seems unnecessarily confusing, and perhaps a bit daunting, here’s the good news—the same strategy can be used to boost all three scores, all at the same time. In this post, I’ll briefly explain why you have 3 credit scores, and why they’re all different, so that you can have a better understanding of my next post, which will give you the tools you’ll need to maximize them.

Some Background

In a prior post, The Real Value of Good Credit, I wrote about obtaining and reviewing your official credit reports from the 3 nationwide credit reporting companies—Equifax, Experian, and TransUnion. In another post, Decoding Credit Score “Mystery Math”, I broke down the parts of these reports that FICO uses to compute your overall scores.

In the end, because there are three nationally-recognized credit bureaus, you wind up with 3 FICO scores—one based on the data from your Equifax credit report, one based on your Experian report, and one from TransUnion.

Why are the Scores Different?

While reports from Equifax, Experian, and TransUnion contain largely the same information, there are some differences—information regarding rent payments, more- or less-detailed employment history, and the order in which your open vs closed credit accounts are listed.

Different lenders might value these subtle differences and pull your credit from a particular bureau accordingly. Mortgage lenders might care more about your employment history, while your auto leasing company could be more concerned with your rent payments. Each will have their preferred bureau to pull from. Some may pull from more than one, or even all three!

On the “New Inquiries” section of your credit reports, each individual bureau will list recent credit pulls that were requested only from them. For example, Equifax won’t list recent pulls that were directed to Experian and TransUnion, etc. Each new inquiry is a small negative factor in your FICO score. Since each of your 3 reports may have different data in that section, your scores will vary. If all your recent inquiries were pulled from Experian, you should expect your Experian credit score to be somewhat lower than the others. So, yes, it’s important to know all three of your scores, so that you can accurately monitor the overall health of your credit rating. NEXT UP: How to Boost Your Credit Scores

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