Last updated on September 1st, 2023
Your credit score plays a vital role in helping you improve your finances. Good credit opens the door to lower interest rates on loans and refinancing, larger credit limits, and more. So it can be worrying when you look at credit scores from multiple sources and they all appear drastically different. But why would someone have differing credit scores, and what makes them so different?
Why Do My Credit Scores Look Different?
There are several fundamental reasons why you may see different credit scores when checking your score through free apps or on application decision letters.
Differing Scoring Models
The main reason why your credit scores appear different is that there are different scoring models. There are currently dozens of credit scoring models, but only two that really apply to credit cards: VantageScore and FICO. These two scoring models are used by over 99% of lenders and banks to judge a credit card applicant’s level of risk.
While both FICO and VantageScore’s scales range from 300 to 850, they place greater emphasis on different areas. Both place the most weight on payment history. FICO gives higher importance on credit utilization than VantageScore, however. Because these two models have differing formulas, you are likely to see different credit scores.
VantageScore 3.0 Scoring Factors
VantageScore evaluates information in six categories. Taken from a consumer’s credit file, this information is described in terms of influence. VantageScore’s descriptive terms usually range from “extremely influential” to “less influential.”
FICO Score Factors
FICO Score groups the information provided by consumer credit reports into five categories, each of which is assigned a percentage of the total score:
Beyond the differing emphasis on certain factors, VantageScore and FICO differ in how they generate their scores. FICO bases their score on the information from a single credit bureau. VantageScore, on the other hand, is an amalgamation of information from all three major credit bureaus.
Different Score Versions
Credit scoring models are always adapting to better serve both borrowers and lenders. Because of these changes, as well as who is accessing the information, there are different versions of both FICO Score and VantageScore models.
FICO Score 8 and the new FICO Score 9, or VantageScore 3.0, for instance, are designed to tell a lender how likely you are to repay a loan. Other models, such as FICO 8 Auto Score, however, are specialized for specific loan types – in this case, auto loans. To sum it up nicely, different versions for different loans provide different scores.
What Information Each Credit Bureau Receives
Not every credit bureau receives all your payment history or other credit information. Some banks or card issuers only report to one credit bureau, while others may report to all three major bureaus: Experian, Equifax, and TransUnion. Because one scoring model might lack specific information, your credit score may be significantly different from one model to another.
Other Reasons for Different Credit Scores
Other reasons for differing credit scores include:
- Your scores were accessed on different dates
- Errors on your credit report
- New hard inquiries haven’t been reported to a credit bureau yet
Which Credit Score Should I Focus On?
Since your credit scores can appear different, is there one score on which to focus? Yes and no.
Yes, because FICO Score is by far the most popular scoring model for lenders. Approximately 90% of banks and lenders rely on FICO for judging an applicant’s creditworthiness. Creditworthiness includes how much of a risk an applicant poses for defaulting on a loan, how much debt they already hold, and how well their finances can adapt to new credit lines.
That said, you should pay close attention to all of your credit scores. After all, a credit score judges your fitness as a borrower. While one score might be higher than another, they combine to provide a full picture of your credit strengths – and weaknesses.
Using all your credit scores allows you to understand your finances better and whether or not you need new credit. Plus, fixing a weakness in one credit score is sure to boost your other scores, as well.
Related Article: Can You Raise Your Credit Score 100 Points In a Month?