Having a good credit score is essential if you want the best offers on credit. It can make a difference to mortgages, car loans or even applying for a credit card. But it can be confusing when your credit score changes across different websites.
Why is this happening?
Should you be concerned?
In this blog post, we’ll look at the UK credit scoring system and delve into the reasons behind these discrepancies. Read on to get a better understanding of why your own credit report and score may differ.
Table of Contents
5 reasons why your credit score differs across different sites
1. Multiple credit scoring models.
The primary reason for varying credit scores is the use of multiple scoring models. There are three main credit bureaus and they use different scales and information to calculate your credit score. Most other websites and apps use one of these to show your score as well.
Each model may generate a slightly different score. This leads to discrepancies across platforms.
2. Data sources and reporting practices.
Another factor affecting each credit score is the data that’s used. Credit bureaus collect information from various sources, including banks, utility companies and lenders.
However, not all lenders report data to every credit bureau. This means that one site may have access to a bigger set of data. This results in a more accurate view of your credit history.
3. Timing and frequency of updates.
Not every credit bureau updates your credit score at the same time, even if they’re using the same information. Some sites may update your credit score on a daily basis, while others might do it every month or so.
Recent changes can affect your score too (such as paying off a debt or applying for new credit). It’s possible that one site reflects these changes sooner than another. This can lead to temporary differences in your credit scores.
4. Credit score ranges and categories.
It’s important to note that credit score ranges and categories can vary across different credit files. Each of the major credit bureaus uses their own scoring range and categories. So one might classify a score as excellent, while another classifies the same score as good or fair.
As a quick example, a credit score of 600 is good on Equifax, fair on Transunion and poor on Experian. This is because they all use different scales.
5. Credit report errors and discrepancies.
Discrepancies in credit scores can sometimes arise due to errors or inconsistencies in your credit reports. Regularly reviewing your credit file can help you identify any inaccuracies.
Errors in reported debts, missed payments or even incorrect personal information. These can all impact your credit score on different sites. Fixing these errors can ensure a more consistent credit score.
Why do you have 3 different credit scores?
In the UK, there are 3 major credit reference agencies. They are Equifax, Experian, and TransUnion. Each agency calculates your credit score differently. This results in the existence of 3 different credit scores.
Here’s a breakdown of their various scoring models and systems:
TransUnion credit score
TransUnion is a leading credit reporting agency in the UK. It provides credit reporting and scoring services. These are based on a range of factors including:
- payment history
- credit utilisation
- length of credit history
- types of credit accounts
- recent credit activity
These scores are designed to help lenders assess credit risk and make lending decisions.
Their credit scores typically range from 0 to 710.
Equifax credit score
Equifax is one of the three credit reporting agencies in the UK. Their credit scores typically range from 0 to 1000. A higher Equifax credit score signifies a lower credit risk.
Equifax takes into account your credit limits, as well as:
- your payment history
- credit utilisation
- credit mix
- length of credit history
Experian credit score
Experian is the third credit reporting agency in the UK. They calculate credit scores ranging from 0 to 999. An Experian credit report takes into account multiple factors such as:
- payment history
- credit utilisation
- available credit
- recent credit applications
A higher Experian credit score indicates greater creditworthiness.
Can I get a free credit report?
You are also entitled to one free copy of your credit report. You can claim this from each of the three bureaus every 12 months.
How do I know which credit score my lender will look at?
Lenders may use one or more of these credit score versions when assessing you. If you want to find out more about which they use, ask the lender directly.
Should I be worried if my scores are different?
It’s natural to be concerned about discrepancies in your credit report or your scores. But slight variations between different credit score websites are relatively common. The credit score you see on these platforms could be an estimate. They might not be the exact score used by lenders.
Direct Lenders like Lending Stream may consider additional factors as well as your credit score. They may want more information about your current finances as well.
What Should You Do if You Have Specific Concerns or Questions Regarding Your Different Credit Scores?
If you have specific concerns or questions regarding your credit scores, contact the respective credit bureaus. They may be able to give you more information Discovering variations in your credit scores shouldn’t cause panic. Remember that credit scores can differ due to multiple factors. These include:
- use of different scoring models.
- variations in data sources.
- reporting practices.
- scoring range differences.
- potential discrepancies in credit reports.
Minor score differences are generally expected. They may not have a significant impact on your overall creditworthiness. Instead of fixating solely on the numbers, it’s worth looking at the overall trend and ratings.
If your scores generally fall within the same credit range and reflect responsible credit behaviour, then there shouldn’t be any issues.
FAQs
What is a credit reference agency (CRA)?
A credit reference agency (CRA) is a company that collects and stores financial information about individuals. This includes data from banks, lenders, credit card companies, and other financial institutions. CRAs use this information to create credit reports and calculate credit scores, which help lenders decide whether to approve credit applications. In the UK, the three main credit reference agencies are Experian, Equifax and Transunion. Each agency may hold slightly different information, so it’s important to check your credit reports with all three.
Why do credit scores differ?
Each of the three credit bureaus calculates your credit score independently. They have different scores and scales, and they may not all gather the same information.
Do lenders see a different credit report?
Yes, lenders can see the different agencies’ credit reports. Lenders can choose which credit reference agency they want to use. This determines the information they use when assessing their creditworthiness.
Do mortgage lenders look at different scores?
When applying for a mortgage in the UK, lenders may request credit reports from one or more of these agencies. They will review the information provided, including credit scores. They use this to assess the borrower’s creditworthiness and to determine the terms of the mortgage.
Disclaimer: The information given above is provided for reference only. This is not financial advice.