Credit Score, Part 2

Each of the credit reporting agencies (Experian, Equifax, and TransUnion) maintains a separate credit report on every consumer. In conjunction with this credit report, each has a corresponding credit score. The information on each credit report is often slightly different because not all creditors report data to all three credit bureaus. Thus, when you review your three credit reports side-by-side, you'll often notice small discrepancies (which is normal). Because your credit score is calculated by the data on each credit report, each of your credit scores will also be slightly different.

When you apply for a major credit card or store credit card, for example, that creditor will check your credit history by reviewing your credit report obtained from one of the credit reporting agencies. Which agency they use (Experian, Equifax, or TransUnion) is their decision. In many cases, when you're offered a credit decision in under five minutes, that decision was based exclusively on your credit score that went along with the credit report accessed. The quick approval or rejection was an automated decision.

When you apply for a more substantial loan, such as a mortgage, the mortgage broker or mortgage finance company will typically access all three of your credit reports, then use the middle credit score as a tool to help make an approval decision. If only two credit scores are available, which is not unusual, then the mortgage company will rely on the lower of the two credit scores.

Because the information on your credit report constantly changes, as creditors report new or updated data, and old data (over seven years old) drops off your credit report, your credit score from each credit reporting agencies also changes. The information, however, is based exclusively on information found in that credit report.

In other words, your credit score does not take the following data into account:

• Personal information, such as your sex, race, religion, nationality, or sexual orientation
• Your checking or savings account balances
• The value of your personal assets