Your credit score may be the single most important piece of financial information about you, as it often decides whether you qualify for loans, credit cards, and a mortgage. If you check your score regularly (as you should!), you may have noticed discrepancies between Equifax and TransUnion scores. Don’t panic! There are a variety of reasons your score may differ slightly between credit bureaus, and most of them are benign and won’t hurt your score.
However, if you notice large discrepancies, always contact your credit bureau to rule out credit fraud.
Reasons Why Credit Scores Vary
Types of Data & Information Provided to Credit Bureau
Credit bureaus primarily base your credit score on information they receive from lenders, and not every lender or creditor sends reports to all credit bureaus. Sometimes a lender will only provide data to one bureau, or they will send reports to bureaus at different times. This can lead to discrepancies between various credit bureaus.
Differences in Credit Checks
In the world of finance, there are two types of credit checks: “soft” and “hard.” When you check your credit score through an online report, this is considered a soft credit check. Soft credit checks do not affect your credit score.
Hard checks, on the other hand, are formal requests from credit bureaus to examine your credit score and history. These checks are usually conducted when you apply for a loan, credit card, or mortgage.
Multiple hard checks at once can damage your credit score because bureaus monitor these checks to learn about consumers who may have a higher debt load than they can handle or may be short on funds. These consumers are a higher risk for lenders, and their credit scores will reflect this reality. As a result, it’s best to only apply for credit that you truly need.
Differences Between Credit Scoring Models
Not all lenders or creditors use the same scoring models, and this can lead to discrepancies in your credit scores. In Canada, most lenders use the FICO scoring model, but there are dozens of other scoring models out there, all of which evaluate criteria slightly differently. There are even variations between different FICO models!
Date of Comparison
Not all credit bureaus update scores at the same time. Depending on when you view your credit report, you may notice discrepancies between bureaus because one score has not been updated as recently and is outdated. Try checking again at a later date to see if the discrepancy corrects itself. If it doesn’t, contact the credit bureau directly.
Build Credit Towards a Home with JAAG Properties
If you are struggling to qualify for a mortgage due to bad credit or no credit, we can help! Our Rent to Own program was designed with you in mind, allowing you to live in your new home while you build good credit and save money for a down payment. Apply online today or contact us for a consultation!
