For years you’ve been doing everything right. You scored a good job. You bought a house. You pay your bills on time every month. You have two credit cards, which you pay off monthly. You even request a credit report from Transunion every year to check your credit score, which is very, very good.
You go to the bank and apply for a mortgage on what is to become your first rental property. But your application gets rejected, because the bank saw something you haven’t seen, on your credit report.
What’s going on?
When it comes to credit bureaus, there are three heavyweights in the United States: Transunion, Equifax and Experian. While all three collect and store consumers’ credit history, these bureaus are in direct competition with each other. Competition means different information is being collected, which can change your credit score from one bureau to another. It can also mean mistakes can slip onto one of your reports but not the others. Depending on which bureau(s) your bank uses, your credit score may not be what you were expecting.
Credit reports vary somewhat from one bureau to another, which is normal. But why are credit reports from the three bureaus different?
Different Names or Spelling
Do you usually go by Mike, Mikey, Mitch or Michael? If you often use a nickname or shorter form of your first name, it’s bound to appear on some of your paperwork. Maybe your landlord has you listed as Mike, while at work they use Michael John, your first and middle name, on your paycheck. When your name appears differently, it’s difficult for credit bureaus to match-up all of your documents.
Another issue arises from having a different or unusual spelling to your name. If you’re a Marc instead of a Mark, your name has likely been misspelled at some point.
Report Created on Different Dates
Another common cause for discrepancies is reports being created on different dates. Credit bureaus receive new information on a daily basis. If Transunion pulled your report one week and Equifax the next, there could be new information on the second report, which can change your credit score.
Processing Time for New Information
New data may be processed more quickly depending on time of year, staff availability and method of data entry. One bureau may simply process your information faster than the others. Furthermore, lenders may not send out data to bureaus at the same time, making processing time appear longer or shorter.
Information Can Be Weighted Differently
Each credit bureau uses its own formula to calculate your credit score. Your available credit may be more heavily weighted for one bureau’s calculation, while your mortgage may be more important in another. By weighting your data differently, it’s normal for your final score to be different from the three bureaus.
Credit Bureaus Don’t Share Information
Each bureau operates independently and doesn’t share its information with the competition. Since bureaus don’t share, it’s normal for one bureau to have more information about you than the others.
Different Ways of Retrieving Information
Credit bureaus receive their information in different ways. Some lenders have agreed to deal exclusively with one credit bureau, and therefore can’t release any information to the other two.
Not All Creditors Report to All Three Credit Bureaus
It’s frustrating to receive incomplete credit reports, but in some cases, there may be little you can do about it. Creditors are not required by law to report to all three credit bureaus. If your credit card company doesn’t have an association with Experian, for example, it won’t show up on your report. You can ask the credit bureau to add the information to your file. They aren’t required to do so but may do it for a fee.
What Should You Do About It?
If your reports are different, do you need to address it? What should you do about it?
If any information is missing from your report, or if you find a mistake, contact the credit bureau and let them know. Check your statements for any name changes, misspellings or out of date personal information. It’s not normal to have really different results from one bureau to another. If there’s a mistake, it could cost you that loan you want, or that low interest rate.
Requesting your credit report from Transunion, Equifax and Experian can help you identify any potential problems. But don’t forget that it’s normal to have a slightly different credit score from each bureau, and don’t panic as long as the information on your reports is accurate.