Credit reports and credit scores can be confusing.  There are 

three credit reporting agencies – Experian, TransUnion and Equifax – that collect data on Americans, but your credit report may differ from one to the other. And your credit score may not be consistent from one lender to the next.

 

There are reasons for all of this, of course.

 

Credit reports differ because reporting is voluntary on the part of the lender or creditor, says Rod Griffin, director of public education for Experian. They can report some or all of their experiences with you – or report nothing at all. Lenders who do report typically do so once a month on a date of their choosing.

 

“There are significant costs to reporting,” which may deter small banks and lenders from participating, Griffin said.

 

If your lender reports, say, to Experian and TransUnion, but not to Equifax, your credit reports will not match. That is why when you apply for a loan, line of credit or credit card, the lender pulls all three reports, Griffin says. It is the only way to make sure they have all the information available. 

 

It’s also the reason why, when you pull the free credit report you are entitled to annually, you should pull all three reports. An inaccuracy can appear on one without showing up on the others.

 

So your credit report is just a log of your borrowing and payment activity.

 

Credit scores, on the other hand, are generated by computer programs that take your credit history and crunch the numbers in a particular way.  Lenders use a score to help evaluate a credit history, but “The scores are not everything, particularly with large lenders,” Griffin says.

 

You may have heard of FICO scores. Fico is a company that specializes in developing credit score models to help lenders assess risk. It has developed a collection of computer programs, he says, and a lender can elect to use one of the those, can write one themselves or have one written specifically for them. Clearly, your credit score is likely to vary from lender to lender.

 

Any program will weight some things more heavily than others, based on what past behavior the lender believes best predicts how you will perform on a new loan. If the lender thinks the way you have handled your car loans is a better indicator of how well you will pay than the way you have handled credit card debt, it will choose to use a program that puts more emphasis on car loans.

 

You can request a credit score when you pull your credit report, although – while the report is free – you will be charged a fee for the score, Griffin said. The score you receive will be a generalized number generated by the computer program the credit reporting agency uses. Along with the score, you will get a list of the characteristics of your credit history that are holding down your score, Griffin says. That list will be consistent from report to report even though scores may vary, so if you tackle the issues on one credit report you will pull up all your scores, he says,

 

 "It’s very helpful," Griffin says. "That tells you what you need to work on to become more financially healthy."