Did you look into your credit score health and get a shock seeing that one of your credit scores was much lower than your other two scores? You’re not alone, it happens all the time. The most common reason for lopsided scores is that banks, creditors, and collection companies are not required to report to all three credit reporting agencies. Some creditors, like small community banks, do not report at all. When you’re trying to repair your credit, keeping on top of what each reporting agency is reporting is critical. Let’s take a closer look at why your credit scores are different among the three reporting agencies.
Collection Companies
Many collection companies only report to one reporting agency. This means that two of your credit reports might produce a much higher credit score. The same can be said about creditors reporting good information. A creditor may report your good payment history to one credit bureau while ignoring the other two. Whenever you’re trying to obtain new credit, it’s good practice to ask the creditor if they report to all three credit reporting agencies, so you get the full benefit of establishing good credit.
Other Factors that Make your Credit Scores Different
Your credit scores are sometimes calculated using different scoring models. FICO periodically updates its credit scoring models, so multiple FICO Score versions exist. The models feature unique formulas that cater to credit card issuers, mortgage lenders, and car sellers, each placing importance on different factors.
For example, if you have a car repossessed or miss payments on your auto loan, your FICO Auto Score may put extra weight on those factors. Your base FICO Score will be affected too, but it may be weighted differently. Although your scores may vary, they’re all based on the information provided by the credit-reporting agencies. Staying focused on what’s in your credit reports is the best way to repair and build your credit.
What’s the Best Credit Score?
FICO Scores are used in over 90 percent of U.S. lending decisions. If you stay focused on your FICO Score, that’s a good use of your energy. Some credit scores are meant only for educational purposes and are rarely used by lenders when making credit decisions. A good FICO score is above 670. A very good FICO score is above 740 and an exceptional FICO score is above 800.
Are You Working on Credit Repair?
If you made the decision to get back on track with your finances and repair your credit in 2020, we can help. You’ve already done the hard part – committing to change. Now you just need some experienced guidance to ensure you meet your goals in a smart way, and as fast as possible. Give us a call, tell us your story, and we’ll let you know how we can help you repair your financial health.
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