Why do credit scores vary across credit bureausA credit score reflects the financial well-being of the borrower. Whether applying for a credit card or any other loan, a credit score is one unique figure that will determine whether a lender will trust you for the loan service or not. There are times when borrowers get confused with their credit scores as different credit scoring models, agencies and bureaus can have different results. Which one to go ahead with is a puzzle.
When you are comparing credit score results on two agency websites and the score appears slightly different, keep calm as it is completely normal to have a slight difference between the two calculations. For instance, a borrower with an 850 score on Experian may have a 750 on TransUnion CIBIL and a 700 on CRIF High Mark. It is up to lender’s discretion as to which report is further submitted to major credit agencies like TransUnion CIBIL, Equifax etc.
There will not be a discrepancy in a credit score result if you are regular with EMI payments, holding a low-key credit card and do not hold multiple credit accounts. Develop healthy financial habits and keep the credit scores consistent across all credit bureaus.
Research thoroughly about the credit agencies before calculating a credit score from a specific platform. Don’t fall prey to fraudsters who cheat, capture your data and never disburse the loan.
Here are some reasons why a credit score differs across bureaus:
Use of credit scoring model:Lenders consider scoring models either from Transunion CIBIL, CRIF High Mark, Experian or Equifax. These bureaus evaluate the credit score based on factors such as payment history and utilization rate and many other factors. So, this can bring some difference in the final score when compared.
Credit bureau:Credit scores are derived based on the data given in your credit report. This data is calculated via major credit bureaus — Experian, CIBIL or TransUnion. Hence, the score differs based on the data provided to each bureau. Sometimes not all the required credit accounts data is reached to the bureaus as lenders are not required to report to all the bureaus.
Scores become outdated:If you check your credit score at intervals, you will notice a difference between the two scores on different platforms, as one of the credit scores may be outdated.
Credit report errors:Credit scores can cause errors in your credit report. Hence, if you are sure about no discrepancy in your credit account, raise a dispute to resolve errors in your credit report before it lowers your credit score drastically.
There is no fixed credit score that is mandatory. But, credit score is an important factor in India while approving maximum lending decisions.
Finally, it is good to compare your credit score on multiple scoring platforms before applying for personal loans online. However, a slight difference should be ignored. In case of a major discrepancy, it should be resolved timely with the submission of an error report, so that future credit decisions remain unaffected.