The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
If you’ve ever checked your credit score across each of the different credit bureaus (Equifax, Experian and Transunion) or through multiple credit monitoring sites, you may have noticed some differences in points.
Credit scores are three-digit numbers that range from 300 to 850 and are based on five main factors—payment history, credit utilization, length of credit history, types of credit and new credit. Though these factors remain pretty consistent across all scoring models, you may not see the exact same score from every credit reporting agency.
The difference in scores can seem confusing, making it difficult to understand the credit score range you fall under. Luckily, a difference in scores is common and doesn’t have a huge impact on qualifying for new lines of credit. The important thing is that the same general information is evaluated across all credit agencies.
In this guide, we’ll answer why your scores may be different, when to be concerned about any discrepancies and which credit scores matter most to lenders.
Why are my credit scores different on different sites?
When checking your credit score, different sites may populate different scores. For example, some 3rd party sites report scores from TransUnion and Equifax. These scoring models generally use VantageScore 3.0, which may pull a different score than your bank which offers you free access to your FICO score.
It primarily comes down to what scoring model is being used. There are many different types of credit scores, but they use two main scoring models—FICO Score and VantageScore.
FICO Score vs. VantageScore
Though each credit scoring model is based on similar factors, the impact of the factors on your credit score differs from model to model.
Your FICO score is based on the following factors:
- Payment history (35 percent)
- Amount owed (30 percent)
- Length of credit history (15 percent)
- New credit (10 percent)
- Credit mix (10 percent)
The factors that impact your VantageScore are:
- Total credit usage, balance and available credit (extremely influential)
- Credit mix and experience (highly influential)
- Payment history (moderately influential)
- Age of credit history and new accounts (less influential)
As you can see, the information gathered for each scoring model is the same, with some information weighing more heavily than others. For example, payment history is the biggest factor making up your FICO score, but it’s only considered moderately influential when calculating your VantageScore.
5 reasons your credit scores are different
Now that we understand exactly what each credit scoring model looks at, let’s dive into why your credit scores can differ.
1. Your score was calculated using a different scoring model
As mentioned, your credit score can be calculated using one of the two main credit scoring models—FICO and VantageScore. Your score could appear different because of the difference in the calculations mentioned above. If you were late on a payment, your FICO score could be majorly impacted, but your VantageScore may not see the same drop.
2. Information varies between credit bureaus
Credit scores are calculated by using the information that appears on your credit report, which comes from one of the three credit bureaus. When lenders report information regarding your accounts to the credit bureaus, they’re not required to report to all three—some may even report to only one.
Information that may appear on your report from one credit agency may not appear on another. Because of this, each of the three bureaus can have different information on their reports, resulting in a potential difference in scores.
For example, if Experian had a record of a payment you missed but the other bureaus didn’t, a score based on your Experian report would likely be lower than a score based on the other bureaus’ reports.
3. Different credit score version
On top of there being different credit score models, there are also different versions of credit scores. For example, FICO uses different scores depending on the type of loan you’re applying for. If you’re applying for an auto loan, the lender may look at your FICO Auto Score. Or, if you’re applying for a credit card, credit card issuers may look at your FICO Bankcard Score.
If you’re looking to obtain one of these kinds of loans, you’ll want to know your industry-specific scores ahead of time. While the FICO Score 8 model is most widely used, it’s up to each lender to decide which score they will use when determining your creditworthiness.
Credit score versions are updated every few years when needed. When a new version is rolled out, certain lenders may be slow to adopt the new versions or may choose not to. Because each updated version has slightly different scoring methods, this could cause a difference in credit scores.
4. Your credit scores were recorded at different times
Though your credit report is updated monthly, the time at which your credit score was calculated can vary. As new information is reported to the credit bureaus and your report is updated, your credit score can change. Because of this, your credit score can look different simply because it was calculated on an earlier or later day.
If your credit score was calculated on one day, but new information regarding your credit was reported a day or two later, there could be a difference in scores.
5. There are errors on your credit report
As mentioned, information can be reported to credit agencies, but lenders don’t always choose to report to all three. There could be a difference in your scores if errors or inaccuracies appear on one credit report, but not the others. If this is the case, you’ll want to dispute these errors to avoid further impact on your credit score.
When checking your credit report, you’ll want to look at the following:
- Late payments and charge-offs
- New accounts
- Increases in card balances
- Decreases in card balances
- Hard inquiries
Which credit score matters to lenders?
Though each lender has their own method of determining creditworthiness, FICO is one of the most used credit scoring models. In fact, 90 percent of lenders use the FICO scoring model when making lending decisions. While FICO remains the most widely used scoring model, you should still monitor your other credit scores since the models used vary from lender to lender.
Can your credit score be wrong?
Yes, there is a chance your credit score could be wrong because of fraudulent activity or an error on your credit report. If you see a major point difference between your credit scores, you may want to look a little further into what happened. You can do this by accessing each report and analyzing it for errors and discrepancies. If the information on your credit reports is inconsistent, you may need to look into this further.
If information that can significantly impact your credit score—like paying off a large amount of debt or noticing an error in payment history—is only reported to one credit agency, you’ll definitely want it reported across all bureaus. You can do this by filing a dispute or submitting a rapid rescore.
Remember, you can access one free annual credit report from each of the three credit bureaus by visiting www.AnnualCreditReport.com.
Not all credit scores will be the same, but you do want to be sure you’re properly monitoring your credit report so you understand all of the factors impacting your credit score. Small differences in credit scores are nothing to worry about. Focus on maintaining positive credit habits so you can set yourself up for success when qualifying for new lines of credit and loans.
Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.
Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Does Getting Joint Credit Cards Have an Impact on Both Spouses’ Credit?
While marriage can help you improve your financial situation, it does not automatically mean that you and your spouse will share a credit report. Your credit records will remain separate, and any joint accounts or joint loans that you open will appear on both of your reports. While this can be advantageous, it’s critical to remember that joint account activity can effect both of your credit scores positively or negatively, just as separate accounts do.
Users Who Are Authorized
An authorized user is a user who has been added to an existing credit account and has been granted the authority to make purchases. Authorized users are typically issued a card bearing their name, and any purchases made by them will appear on your statement. The primary distinction between an authorized user and a shared account owner is that the account’s original owner is solely responsible for debt repayment. Authorized users, on the other hand, can always opt-out of their authorized status, although the principal joint account owner cannot.
If your credit score is better than your spouse’s as an authorized user, he or she may benefit from a credit score raise upon account addition. This is contingent upon your creditor notifying the credit bureaus of permitted user activity. If your lender does report authorized users, the activity on your account may have an effect on both you and your spouse. However, some lenders report only positive authorized user information, which means that late payment or poor usage may not have a negative effect on someone else’s credit. Consult your lender to determine how authorized users on your account are treated.
Joint Credit Cards Have an Impact on Your Credit Score
Opening a joint credit account or obtaining joint financing binds both of you legally to the debt’s repayment. This is critical to remember if you divorce or separate and your spouse refuses to make payments, even if previously agreed upon. It makes no difference who is “responsible,” the shared duty will result in both partners’ credit histories being badly impacted by late payments. Regardless of changes in relationship status or divorce order, the creditor considers both parties to be liable for the debt until the account is paid in full.
Whether you’re happily married or divorced, you and your spouse may decide to open separate credit accounts. Most creditors will enable you to transfer an account that was previously joint to one of your names if both of you agree. However, if there is a debt on the account, your lender may refuse to remove your spouse’s name unless you can qualify for the same credit on your own. Depending on your financial status, qualifying for financing and credit on a single income may be tough.
While creating the majority of your accounts jointly with your spouse may make it easier to obtain financing (two salaries are preferable to one), reestablishing credit independently following a divorce or separation is not always straightforward. To make matters worse, your spouse may wind up causing significant damage to your credit rating following the separation, either intentionally or through irresponsibility – making the financial situation much more difficult.
Before you rush in and open accounts with your spouse, take some time to discuss the shared responsibility of these accounts and what you and your husband would do in the event of a worst-case situation. These types of financial discussions can be difficult, especially when you rely on items lasting a long time, but a mutual understanding and respect for each other’s credit can go a long way toward keeping your score when sharing an account.
Should you pay down debt or save for retirement?
While establishing a comprehensive, workable budget is undeniably one of the most important factors in maintaining a healthy financial life, it can also be one of the most difficult. For those who are struggling with personal debt, building a budget can be particularly challenging. When the money coming in has to stretch like a contortionist to cover expenses, it can be hard to determine where to focus — and where to trim.
Sometimes, the battle of the budget can come down to a choice between dealing with the present — and thinking about the future. When your income is running out of stretch, do you pay off your existing debt, or do you start saving for retirement? At the end of the day, the solution to that particular dilemma depends on the type of debt you have and how far you are from retiring.
If you have high-interest debt, pay it down
When considering how to allocate your budget, it’s important to understand the different kinds of debt you may have. Consumer debt can be categorized into two basic types: low-interest debt and high-interest debt, each with its own impact on your credit (and your budget).
In general, low-interest debt consists of long-term or secured loans that carry a single-digit interest rate, such as a mortgage or auto loan. Though no debt is the only real form of good debt, low-interest debt can be useful to carry. For instance, purchasing a home with a low-interest mortgage can actually save you money on housing costs if you do your homework and buy a house well within your price range.
High-interest debt, on the other hand, typically has a hefty double-digit interest rate and shorter loan terms, such as that of a credit card or payday loan. High-interest debt is the most expensive kind of debt to carry from month to month and should always be priority number one when building a budget.
To illustrate why you should focus on high-interest debt above everything else, consider a credit card carrying the average 19% APR and a $10,000 balance. If the balance goes unpaid, that high-interest credit card debt will cost $1,900 a year in interest payments alone. Now, compare that to the stock market’s average annual return of 7%, and it becomes clear that you’ll see significantly more bang for your buck by putting any extra funds into your high-interest debt instead of an investment account.
If you are having trouble paying off your high-interest debt, there may be some steps you can take to make it more manageable. For example, transferring your credit card balances from high-interest cards to ones offering an introductory 0% APR can eliminate interest payments for 12 months or more. While many of the best balance transfer cards won’t charge you an annual fee, they may charge a balance transfer fee, so do your research. You’ll also want to make sure you have a plan to pay off the new card before your introductory period ends.
Most balance transfer offers will require you to have at least fair credit, so if your credit score needs some work, you may not qualify. In this case, refinancing your high-interest debt with a personal loan that has a lower interest rate may be your best bet. Make sure to compare all of the top bad credit loans to find the best interest rate and loan terms.
If you’re nearing retirement, start to save
The closer you get to retirement age, the more important it becomes to ensure you have adequate retirement savings — and the more pressure you may feel to invest every spare penny into your retirement fund. No matter your age, however, paying off your high-interest debt should always remain the priority, as it will always provide the best rate of return (as well as likely provide a credit score boost).
Indeed, no matter how tempting it becomes, you should avoid reallocating money you’ve dedicated to paying off high-interest debt to save for retirement. Instead, the focus should be on re-evaluating your budget to find any additional savings you can. To be successful, you will need to make a strong distinction between want and need — and, perhaps, make some tough lifestyle choices.
Though simply eliminating your daily coffee drink won’t magically provide a solid retirement fund, saving a few bucks by homebrewing while also eliminating a pricey cable bill in favor of an inexpensive streaming service — or, better yet, free library rentals — can add up to big savings over the course of the year. The ideal strategy will involve overhauling every aspect of your lifestyle, combining both large and small cuts to develop a lean budget structured around your long-term goals.
Of course, while you should never allocate debt money to your retirement savings, the reverse is also true. It is almost always a horrible idea to remove money from your retirement account before you hit retirement age — for any reason. Withdrawing early means you will be stuck paying hefty fees for withdrawing money early and, depending on the type of account, you may also have to pay significant taxes.
Aim for both goals by improving income
As you take the necessary steps to pay off debt and save for retirement, you may have already stretched the budget so thin it’s practically transparent. In this case, it is time to consider ways to improve your overall income. Increasing the amount you have coming in not only provides extra savings to put toward your retirement, but may also speed up your journey to becoming debt-free.
The easiest solution may be to look for ways to increase your income through your current job; think about taking on additional shifts or overtime hours to earn some extra cash. Depending on your position — and the time you’ve been with the company — consider asking for a pay raise or promotion, as well.
If you do not have options to make more money at your day job, it may be time to find a second job. Look for opportunities that provide flexible schedules that will accommodate your regular job; many work-from-home positions, for example, can easily fit into most work schedules. Doing neighborhood odd jobs, such as babysitting and dog walking, may also provide a solid income boost without interfering with your existing job.
For some, the need to pay off debt and improve retirement savings can be more than just a source of stress — but a hidden opportunity to begin a new career adventure. Instead of being weighed down by yet more work, use the desire to better your budget as a reason to explore the profit potential of a passion or hobby. Starting a small online store, part-time consulting service, or other small business can be a great way to improve your income and your overall happiness.
While it may sound intimidating, starting a side business can be as simple as putting together a professional looking website and doing a little marketing legwork to spread the word. And no, building a website isn’t as scary — or expensive — as it seems, either. A number of the top website builders now offer simple drag-and-drop interfaces perfect for putting together a professional-looking web page in minutes (without breaking the bank).
How does a loan default affect my credit?
Nobody takes out a loan expecting to default on it. Despite their best intentions, people sometimes find themselves struggling to pay off their loans. These types of struggles happen for many reasons, including job loss, significant debt, or a medical or personal crisis.
Making late payments or having a loan fall into default can add pressure to other personal struggles. Before finding yourself in a desperate situation, understanding how a loan default can impact your credit is necessary to avoid negative consequences.
30 days late
Missing one payment can further lower your credit score. If you can pay the past due amount plus applicable late fees, you may be able to mitigate the damage to your credit, if you make all other payments as expected.
The trouble starts when you (1) miss a payment, (2) do not pay it at all, and (3) continue to miss subsequent payments. If those actions happen, the loan falls into default.
More than 30 days late
Payments that are more than 30 days past due can trigger increasingly serious consequences:
- The loan default may appear on your credit reports. It will likely lower your credit score, which most creditors and lenders use to review credit applications.
- You may receive phone calls and letters from creditors demanding payment.
- If you still do not pay, the account could be sent to collections. The debt collector seeks payment from you, sometimes using aggressive measures.
Then, the collection account can remain on your credit report for up to seven years. This action can damage your creditworthiness for future loan or credit card applications. Also, it may be a deciding factor when obtaining basic necessities, such as utilities or a mobile phone.
Other ways a default can hurt you
Hurting your credit score is reason enough to avoid a loan default. Some of the other actions creditors can take to collect payment or claim collateral are also quite serious:
- If you default on a car loan, the creditor can repossess your car.
- If you default on a mortgage, you could be forced to foreclose on your home.
- In some cases, you could be sued for payment and have a court judgment entered against you.
- You could face bankruptcy.
Any of these additional consequences can plague your credit score for years and hinder your efforts to secure your financial future.
How to avoid a loan default
Your options to avoid a loan default depend upon the type of loan you have and the nature of your personal circumstances. For example:
- For student loans, research deferment or forbearance options. Both options permit you to temporarily stop making payments or pay a lesser amount per month.
- For a mortgage, ask the lender if a loan modification is available. Changing the loan from an adjustable rate to a fixed rate, or extend the life of the loan so your monthly payments are smaller.
Generally, you can avoid a loan default by exercising common sense: buy only what you need and can afford, keep a steady job that earns enough income to cover your expenses, and keep the rest of your debts low.
Clean up your credit
The hard reality is that defaulting on a loan is unpleasant. It can negatively affect your credit profile for years. Through patience and perseverance, you can repair the damage to your credit and improve your standing over time.
Consulting with a credit repair law firm can help you address these issues and get your credit back on track. At Lexington Law, we offer a free credit report summary and consultation. Call us today at 1-855-255-0139.
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