Your credit report may show a marked difference in your score. This does not necessarily mean that your credit score is low or you have been in financial trouble. There are a few possible reasons that your score might be higher than it should. Most cases are due to errors or differences in reporting. You can correct any errors by talking directly to the creditor and the credit bureau.
Credit reporting agencies can use a variety different scoring models. Each model weighs information differently. The most common scoring model is FICO. VantageScore uses more data in order to calculate a score.
A Consumer Financial Protection Bureau study has shown that different credit scores can be obtained by consumers. This is due in part to the fact that not all companies report to all three major credit reporting agencies (CRAs). This is because different scoring models are used by CRAs and they rely on different financial data.
A Dodd-Frank Act-related study led to a series of studies by the Consumer Financial Protection Bureau that examined the various differences in credit scores, and other similar functions. The results of these studies were very informative, even though they were not intended to reveal whether credit rating agencies intentionally try to fool consumers by using their scoring systems.
The most basic credit scoring system is called FICO. This is the credit score that most people will see in their credit reports. This score usually reflects your credit history, usage and other information that helps lenders make a decision about whether you are a good or poor risk. Creditors regard the score as a measure for your risk of not being able to pay off your debt. It will vary from one bureau.
VantageScore, a scoring model similar to the one used by VantageScore, focuses more upon how you have made your loans and credit cards over time. To evaluate your credit history and weigh the amount of debt you have, the scoring model takes into account a variety of factors such as your credit history length, your recent payments, and your most recent credit card transactions.
One of the most interesting differences in credit scores is between rural and urban consumers. The average credit score in both the urban and rural groups is quite different. These scores may be affected by the local economy or population. Urban areas are more financially secure than those who live in the metropolitan areas.
Consistency in your reporting is the best way to increase your score. If your creditor fails to report your credit limit to all of the three credit bureaus, you should contact them. You should be able for them to correct the error but it could take some time.
You may also be affected by a credit account that has not been reported to credit agencies. Your credit report should be checked for errors like past names, loan amounts and credit card accounts.