Why does my credit score differ between credit-reporting agencies?

Young woman paying bills onlineImage: Young woman paying bills online

You’ve taken the step to find out what your credit scores are. Hats off to you! You’ll be pleased to know that you’ve also taken the first step to improving your credit health and along with it, your financial well-being.

But if you’ve checked your scores with different providers — banks, credit monitoring services (like us) and credit agencies — you might be confused and possibly a little alarmed as to why your scores with each of them differ.

Worry not. Here we reveal the not-so-mysterious mystery behind the numbers.

What is a credit score?

Let’s go back to basics for a moment. Everyone over the age of 18 has credit scores. Put simply, they are numbers that show how creditworthy you’re deemed.

The higher the score, the higher your chances are of getting credit. Therefore, knowing what your credit scores are arms you with information about how successful you’re likely to be when applying for a mortgage for the house of your dreams, or whether a new provider will give you that all-singing-all-dancing mobile phone contract.

And how are these magic numbers formulated? Well, a credit score is worked out from information that’s provided in a credit report. In the U.K., these reports are carried out by one of three credit reference agencies and look at how well you’ve managed credit in the past and how well you make your repayments.

For a more in-depth read on everything you need to know about credit scores and credit reports, take a look here.

Why is my Credit Karma credit score different?

“So, what’s with all the different numbers?” you may ask. They’re not meant to bamboozle you. But we know they may seem, well, bamboozling.

Basically, each credit reference agency has a slightly different formula it uses to calculate your score. Credit Karma uses the credit reference agency TransUnion, which scores out of 710. Other providers have different scoring ranges — Experian is up to 999 and Equifax is 1000 — so a direct comparison of scores doesn’t really tell you much.

Added to this, some lenders report to all three major credit reference agencies, while others report to only one or two. This means you could be seeing different scores because of the slightly different credit report information supplied by each provider.

What’s important to remember, whoever provides your score, is they’re all basing it on similar information — like the length of time you’ve been on the electoral register, whether you’ve shown you can make repayments on time and stay within credit limits, and how heavily you rely on credit.

And, of course, the higher your scores are, the better chance you’ll be going on that all-inclusive holiday in the sun (green list permitting!).

Can I trust TransUnion with my credit scoring?

TransUnion (formerly Callcredit), which is one of the three main credit agencies in the U.K., uses data and technology to make life simpler for consumers and lenders alike. So you know you’re in good hands.

Why it’s important to check your credit scores

Checking your credit scores is an essential first step on your journey to financial well-being — helping to put you firmly in control. Knowing your scores helps you to spot any inaccuracies in your reports and protect against fraud. It also lets you see how lenders view you, as well as giving you the know-how to improve and, most importantly, get the credit you’re looking for.

Bottom line

Understanding that your credit scores differ among agencies is nothing to fear. And knowing what your credit scores are puts you in the driving seat when it comes to your finances.