Why do Credit Scores Differ from one Credit Bureau to Another?
Last Updated : Jan. 10, 2025, 5:12 p.m.
There are 4 credit bureaus in India namely CRIF High Mark, CIBIL, Equifax, and Experian. Each of these credit bureaus gives a credit score. A credit score is a number in the range of 300 to 900. It is a single digit number that summarizes your credit history and reflects your creditworthiness. Lenders will check your credit score and credit history before approving your credit application. Now, have you ever thought about why credit scores differ across credit bureaus. Let us now understand why.
Why do Credit Scores Vary Across the Credit Bureaus?
The reasons for the disparities in credit scores across credit bureaus is as follows:
Scoring Model
Every credit bureau has its own scoring model to compute credit scores. Various factors are considered during calculation, such as payment history and account utilization. Due to the difference in the models, certain factors may be assigned different weights or additional variables could be added. This leads to differences in the scores.
Variations in Data
Another reason why credit scores differ across credit bureaus is the variance in data. Each credit bureau may not have the same information about credit history. Discrepancies or delays in data reporting can arise for various reasons. For instance, suppose you make a late payment, the creditor may have reported this to one credit bureau but failed to do so to another. This creates differences in credit histories.
Variations in the Frequency of Data Reporting
Further, bureaus receive information regarding your repayment history and debt management patterns from lenders. But, there will be a delay before the bureau gets your details. This can be for a week, month, or quarter.
Assuming that Equifax receives lender information every month while CIBIL receives lender information every week. So, then Equifax will not have all the updated details when you check your weekly score while CIBIL will. Hence credit score differs across credit agencies.
How is the same score from 2 different bureaus interpreted?
While there is a general range of scores, different lenders may interpret the scores differently. Lenders set their own criteria for considering a credit score as acceptable or not. So, they may treat the same score from 2 different bureaus differently. So, to determine a person’s creditworthiness, it is ideal to focus on overall credit behavior. Handling your credit responsibly and maintaining a solid credit profile is more important than the value of your credit score.
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