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Why There Isn’t Just One Credit Score

Dear Experian,

Why isn’t there one credit score across the board? Could you please explain why lenders receive different credit scores than what I receive? Why are the credit scores different from each lender, such as for car loans, mortgages and other loan companies?


Dear ICH,

Asking why there isn’t just one credit score is a bit like asking why General Motors doesn’t build just one vehicle.

Automobiles all have engines, steering wheels and tires, and their underlying purpose is essentially the same – to get us from one place to another. But, people have different requirements for those vehicles to get them from place to place.

As a result, there are two-door cars, four-door cars, mini-vans, sports cars and trucks. They all use the same basic technologies and principles, but are slightly different to meet the very specific needs of the people who use them. Also, some drivers prefer a GM truck and others prefer a Ford truck.

The same is true of credit scores. The technologies and principles they use are very similar. But, there are different scores to meet the specific needs of the businesses that use them. Each score development company offers buyers many different models and each buyer selects the scoring company and the specific model that best meets their needs.

Auto lenders need to know whether or not you will repay a car loan as agreed. Credit card companies need to know that you will make your payment each month. Mortgage lenders need to know you will make your house payment. Insurance companies need to know that you will pay your premium on time and whether you are likely to make a claim. Credit union members manage credit differently than the customers of national banks.

While the information the credit scores use may be the same, what the businesses are trying to learn from that information is different. So, different credit scores have been developed to analyze that information slightly differently for each of those situations.

Economic competition also plays a part. Because our economy is based on competition, scoring companies are always working to develop credit scores that are more effective in predicting credit risk than the scoring systems introduced by their competitors.

It is easy to understand why there are different kinds of cars because we are exposed to them every day. We take those differences for granted.

Most of us are less exposed to credit scores on a regular basis, so the reasons for having different credit scores can be less obvious and harder to understand. I hope this simple analogy helps make it more clear as to why there are many different credit scores.

The most important thing to understand when you purchase a credit score is that the number you receive is only relevant for that particular scoring system, also called a scoring model. However, the risk factors you get with the score will be quite consistent from one scoring model to another.

You can use those factors to change the way you use credit and help improve all of your credit scores.

Thanks for asking.
The “Ask Experian” team