A large change in your credit score can be noticed when you examine your credit report. This does not necessarily mean that your credit score is low or you have been in financial trouble. Your score may be higher or lower depending on a number of factors. In most cases, the differences are caused by errors and/or differences in reporting. You can correct errors by working directly in partnership with the creditor/credit bureau.
Different credit reporting agencies use different scoring models. Each model weights information differently. The most common scoring model is FICO. Other models include VantageScore, which uses more data to calculate a score.
The Consumer Financial Protection Bureau recently found that creditors can give consumers significantly different scores. This is due to the fact some companies don't report to all three national credit reporting agencies. That's because CRAs use different scoring models and rely on different types of financial data.
A Dodd-Frank Act study prompted the Consumer Financial Protection Bureau (CFPB) to do a variety of studies to examine the different credit scores and other similar functions. While they were not specifically designed to determine whether or not credit rating agencies are purposely trying to fool consumers with their scoring systems, the results were pretty revealing.
FICO is the most basic credit scoring method. This is the score you will likely see in most credit reports. This score generally shows your credit history, usage, as well as other information that lenders use to determine whether you're a risk. Creditors regard the score as a measure for your risk of not being able to pay off your debt. It will vary from one bureau.
VantageScore has a similar scoring method. This model focuses more heavily on how much you've borrowed and used credit cards. The scoring model weighs your credit history using a range of factors including your credit length, recent payments and the type of debt that you have.
There are some interesting differences between urban and rural consumers in credit scores. Despite having the same basic credit rating system as the other groups, the average credit score in the former is significantly lower. These scores may be affected by the local economy or population. Urban areas tend be more financially secure and residents in metropolitan areas have better credit habits.
Consistency in your reporting is the best way to increase your score. If your creditor fails to report your credit limit to all of the three credit bureaus, you should contact them. They should be able to fix the error, but it can take some time.
There are other factors that can affect your score, including a credit card account that is not reported to the credit bureaus. Check your credit report for any errors. This includes past names, loan amounts, credit cards, and your own name.