There are three versions of every credit score because credit scores are calculated using the contents of people’s credit reports, and we each have three credit reports – one from each of the three major credit bureaus: Equifax, Experian and TransUnion. A common assumption is that since there are three credit bureaus, each individual must have three credit scores. But that implies there’s just one type of credit score, which is far from the truth. There are many different credit-scoring models and thus many different types of credit scores. You can find more details below.
Three Credit Scores: Myth vs. Fact
Myth: Many people think we each have three, and only three, credit scores, one from each major credit bureau. After all, anyone with a Social Security number who’s ever possessed either a credit card or a loan also has a credit report from each of these bureaus. So it would only seem logical for there to be three corresponding credit scores. But that, as it turns out, isn’t true.
Fact: Having three major credit reports does not mean that we have just three credit scores. Rather, it means there are three versions of each type of credit score that we have. Take the VantageScore 3.0 credit-score model, for example. We each have one of these scores based on our TransUnion credit report, another based on our Experian credit report and a third based on our Equifax credit report.
The same is true of the most popular version of the FICO score, FICO Score 8, as well as older iterations of this base score and FICO’s various industry-specific scores. There are three versions of each, though only two are available to consumers because of a spat between Experian and the Fair Isaac Corporation, the creator and namesake of the FICO score.
All in all, there are more than 1,000 different credit scores in use today.
Why You Only Need One: One of the most important things to understand about this three-by-many credit-scoring environment is that your score isn’t likely to differ much from bureau to bureau. Our three major credit reports contain largely the same information. What’s more, while differences do exist from one credit-scoring model to the next, it doesn’t really matter which model your score is based on. You won’t be seeing the same type of score a prospective lender sees, anyway, as most customize whatever scoring models they use to better suit their specific needs, whatever they may be. This process creates a final product that’s drastically different from anything you can access at home.
As a result, the best way to use your credit score is not as a direct indication of approvability for a particular account or a given rate but rather as a way to determine roughly where your credit stands and then monitor its trajectory over time. With that in mind, you can get your free credit score from WalletHub, based on the VantageScore 3.0 model and TransUnion credit-report data. Sure, there are other places to either buy a credit score or order one for free, and you can compare them here. But our admittedly biased belief is that WalletHub represents the best option because our scores update on a daily basis rather than the weekly-to-quarterly schedules on which all other providers operate.
Ask the Experts: 3-Score Monty
To learn more about the numerous credit scores each of us has, and the confusion that naturally causes, WalletHub asked a panel of money-management pros to share their thoughts on the following questions. See who they are and what tips they have, below.
- Do you think the average person knows they have more than one credit score?
- What do you think confuses people most about credit scores based on different bureaus’ credit reports?
- Do you think it’s important to check more than one type of credit score?
- What’s your favorite credit score tip?
Ask the Experts
Jesse Lineberry
CFP®, Instructor of Finance, Virginia Tech - Pamplin College of Business
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Tamra S. Connor
Ph.D., Associate Dean for Accreditation and Operations, Illinois State University - College of Business
Read More
Arati Kale
Ph.D., Assistant Professor, Finance Department, Providence College, School of Business
Read More
Connie Ostwald
Ph.D., Lead Faculty Economics, Colorado Christian University
Read More
John R. Salter
Associate Chair and Associate Professor in the Department of Personal Financial Planning at Texas Tech University
Read More
Terry E. Rumker
Certified Financial Planner, Director of the Eagle Investment Group and Assistant Professor of Finance in the College of Business and Economics at Ashland University
Read More
More Experts
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As an expert in credit scoring and financial matters, let me delve into the concepts discussed in the article and provide additional insights.
Firstly, it's crucial to emphasize that the article accurately highlights the misconception surrounding the number of credit scores an individual possesses. Contrary to the common belief that each person has only three credit scores (one from each major credit bureau), the reality is more complex. The existence of multiple credit-scoring models means that there are various types of credit scores for each individual.
The article mentions the three major credit bureaus—Equifax, Experian, and TransUnion—each generating a version of a credit score. For instance, it refers to the VantageScore 3.0 credit-score model, indicating that individuals have one score based on each credit report from the three bureaus. The same principle applies to the FICO Score 8 and its variations, with Experian being an exception due to a dispute between Experian and the Fair Isaac Corporation.
Importantly, the article reveals that there are more than 1,000 different credit scores in use today, dispelling the myth of a one-size-fits-all credit scoring system. This diversity arises from the existence of numerous credit-scoring models tailored for specific purposes, including industry-specific scores.
The core message is that while there are multiple versions of credit scores, the differences between them are not typically significant. This is attributed to the fact that the information in individuals' credit reports, which serves as the basis for calculating credit scores, is largely consistent across the three major credit bureaus.
The article wisely advises readers on the pragmatic use of credit scores. Instead of viewing a credit score as a direct indicator of approval or specific interest rates for a financial product, it suggests that individuals use their credit score to understand where their credit stands and monitor its trajectory over time. This aligns with the understanding that lenders often customize their scoring models based on their specific criteria.
Lastly, the inclusion of expert opinions from a panel of money-management professionals adds credibility to the information presented. The questions posed to the experts address common misconceptions about credit scores, the confusion arising from scores based on different bureaus, the importance of checking multiple types of credit scores, and favorite credit score tips.
In conclusion, this article effectively navigates the complexities of credit scoring, dispelling myths and providing practical advice for consumers to better understand and manage their credit.
