Why Don't All Three Credit Bureaus Agree?

Reader Question: I recently ordered my credit reports from all three of the credit reporting bureaus. The information varies from one report to the next, and there's a mistake on two of them but not the third. Why don't all three of the credit bureaus agree with the information they provide?

The easiest answer is that they are three different companies, and they collect and distribute data independently from one another. In fact, that's also the most accurate answer.

TransUnion, Equifax and Experian are three separate entities. They serve the same basic function of collecting and reporting financial data about consumers, but they each have their own exclusive and proprietary data (and their own way of interpreting that data). This is why the information provided by the three credit bureaus doesn't always agree the way you might think.

This is also why your three credit scores don't always match up. When lenders review your score in consideration for a loan, they will typically pull two out of three -- or they'll use your FICO score, which is the most commonly used scoring model.

To help you understand how this all works, I've created a list of events that take place in these situations. Let's call it A Day In the Life of a Credit Score.

• As soon as you get your first credit card, or open your account with a retail store, you are officially "on the grid." This is when you start building a history of credit, and it's when the three bureaus mentioned above start collecting information about you. Spooky, I know, but that's how it works.
• The way you use your credit is noted by these companies, and it will eventually show up in your credit reports. Do you pay your bills on time, or do you have overdue accounts? Do you use your credit sparingly and manage it well, or are you nearly maxed out? Have you ever had an account sent to a collection agency? All of this stuff is recorded as part of your history.
• Your credit reports are then used to produce your scores. They are put through a scoring model such as FICO, which converts all the raw information within your reports into a single numerical score (a higher number is better).
  
• Your credit score is one of the factors that lenders use to determine your "creditworthiness" -- a financial term that describes whether you're a big risk or a small risk for the lender.
• But ... because the data is originally collected by three different credit bureaus, it doesn't always agree like you might imagine. There's only one of you (I hope), but there are three of them. And they all produce different reports and scores, which may not always agree with one another.
  

Probably more information than you wanted, but that's how we roll here at the Consumer Credit Help blog. I hope this answered your question, and I wish you well in your financial future. Happy holidays!

~Brandon