- Equifax and TransUnion base their credit scores on a FICO formula.
- Experian relies on a formula it calls the PLUS Score.
- All three also use something called the VantageScore.
Why do my credit scores from Experian and Equifax differ by 50 points?
I pulled my credit score with Experian two months ago and my score was 619. I just recently pulled my credit score with Equifax and my score was 570. In the past two months I have paid off personal loan. Why did this lower my credit score?
Fair Isaac & Company originally developed the FICO score method of rating consumers' credit histories. The three major credit reporting agencies -- Equifax, Experian and TransUnion -- each report consumer credit scores. Equifax and TransUnion base their credit scores on a FICO formula. The FICO score is a number between 300 and 850 that predicts an individual's creditworthiness based on credit history.
Experian relies on a formula it developed and calls the PLUS Score. The PLUS Score scale ranges from 330 to 830.
The three credit reporting agencies also use VantageScore, a competing score technology to FICO and PLUS Score. The VantageScore scale ranges from 501 to 990. All three three credit reporting agencies use the same formula to calculate the VantageScore, but discrepancies between the resulting scores are common because the three credit reporting agencies have different data in consumers' credit reports.
FICO, PLUS Score, and VantageScore are calculated using mathematical methods that incorporate credit history, amount of credit used and available, number of late and on-time payments, whether any payments due are in default, and other variables. The credit report lists specific accounts and financial history that go into the credit score. The proponents of FICO, PLUS Score, and VantageScore claim their scores are superior to the competition at predicting future consumer behavior. These claims are unsubstantiated. Regardless, FICO is the go-to score most mortgage and vehicle finance companies use when calculating a consumer's credit score.
It is common for one consumer to see their credit score vary by 50 points from one credit reporting agency to another. One reason for a discrepancy is each credit reporting agency may be using a different formula, each of which uses a different scale. The mathematical formulas that drive FICO, PLUS Score, and VantageScore are proprietary and therefore it is impossible to know the precise reason why each formula can generate three different scores for one consumer. Another reason different credit reporting agencies generate a different score is, as mentioned above, each credit reporting agency may have slightly different data in a consumer's file.
Regarding your question, Experian calculates its credit scores with its PLUS Score formula. It also may report the VantageScore. Equifax uses FICO in addition to VantageScore. Which scores were you quoted? If Equifax quoted you a FICO number and Experian quoted you its PLUS Score, then it would not be surprising to see a 50-point difference. If both credit reporting agencies quoted you a VantageScore number, then it is likely your credit files differ at each credit reporting agency.
You also mentioned two months passed between the two reports. Credit reports are an imperfect snapshot of a person's credit history that is always 60 to 90 days out of date. You mentioned you retired a loan. That would not have a negative impact on a consumer's credit score. Given the myriad other variables that would explain the discrepancy between the scores you received from Experian and Equifax, I think it highly unlikely that the loan would explain the 50-point difference.
No-Cost Credit Report
The three nationwide consumer reporting companies have set up a Web site, toll-free telephone number, and mailing address through which you can order a no-cost, no-gimmick credit report. Note that this is a report and not a score. To order, visit AnnualCreditReport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
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