3 Credit Score System

What is the 3 credit score system? Why are there 3 credit scores? There’s more than a little confusion about this issue, and it’s an important one, so it will be a good idea for you to take the time to learn the truth about credit scores and how the 3 credit score system works.

3 Credit Score Myth: Your Score from Each Credit Bureau is the Same

3 Credit Score Fact:

It might seem that since you are only one person, you can expect all 3 credit scores to be the same. The reality is that each credit bureau collects and reports their information independently, and as a result, different information will lead to a different score reflecting your credit power according to each of the 3 credit bureaus.

3 Credit Score Myth: You Only Need One of the Scores to Understand Your Credit

3 Credit Score Fact:

The problem here is that what you don’t know can hurt you. Inaccurate information, identity theft and accounts that don’t report to a certain bureau are the big issues you’ll need to compare across your reports. Plus, you don’t know which credit bureau a potential lender is using to decide whether or not to grant you that loan. Each lender makes its own decision about which credit bureau or bureaus report their information to, so you’re application for a loan based on the score you got from Equifax, or TransUnion, will make a difference. It’s important you have an accurate picture of what to expect, so you that you know just as much as your lender does.

3 Credit Score Myth: The Three Major Credit Bureaus Are Working Together

3 Credit Score Fact:

The three agencies appear to be working in a similar fashion because they are all liable under the Fair Credit Reporting Act to hold true to certain standards. However, each of these entities is an individual company with its own separate profit motive. They do not share your credit information.

3 Credit Score Myth: As Long as You have an Above Average Credit Score, the Information Contained in the Report Doesn’t Matter

3 Credit Score Fact:

In truth, the credit score gives the lender an easy way of knowing which risk category he can assign you to, but there may very well be something in your report that that particular lender doesn’t like to see. Lenders are under no obligation to lend money to you just because you have a high credit score. That being said, a higher score is usually a good indicator of more borrowing power.

A great way to get free credit scores as well as protect your credit standing is with CreditScore.com. You have access to all three scores and your report. That way you have a complete picture of your credit, so you make better borrowing decisions down the road.