Active Stocks
Fri Apr 12 2024 15:57:45
  1. Tata Steel share price
  2. 163.50 -1.00%
  1. NTPC share price
  2. 362.00 -0.32%
  1. ITC share price
  2. 430.10 -1.56%
  1. HDFC Bank share price
  2. 1,518.90 -1.10%
  1. State Bank Of India share price
  2. 766.75 -1.57%
Business News/ Money / Why do credit score ranges vary among different bureaus such as CIBIL, Equifax and Experian?
BackBack

Why do credit score ranges vary among different bureaus such as CIBIL, Equifax and Experian?

There are different versions of credit scores used by various bureaus and lenders. Each bureau may use its own scoring model or variation of a scoring model, resulting in some discrepancies in the score ranges.

The key factors which determine credit scores are usually same across bureaus such as CIBIL and Equifax, including payment history, credit utilisation and length of credit history.Premium
The key factors which determine credit scores are usually same across bureaus such as CIBIL and Equifax, including payment history, credit utilisation and length of credit history.

Have you ever wondered what would happen if your credit score is different across credit bureaus such as CIBIL, Equifax and Experian? For instance, what if your CIBIL score is 760 whereas the one on Equifax is 740. Is this possible and if yes, why?

Well, credit score ranges can certainly vary, albeit slightly, among different credit bureaus, but they fall within similar ranges. The most common credit scoring model is the FICO score, which is between 300 and 850.

A typical credit score range is as follows:

Score rangeWhat does it mean?
 750 - 850Excellent credit
700 - 749Good credit
 650 - 699Fair credit
 600 - 649Poor credit
Below 600Bad credit

Why does the score differ?

It’s vital to note that there are different versions of credit scores used by various bureaus and lenders. Each bureau may use its own scoring model or variation of a scoring model, which can lead to small discrepancy in the score range.

There are a number of factors that contribute to differences in credit scores. These include the following: data variations, scoring models, data reporting, data accuracy and score range differences.

ALSO READ: CIBIL: Financial crisis leaving you fearful? Follow these 7 strategies to protect your credit score

For instance, banks may not report credit information relating to repayments to all the credit bureaus, which leads to the difference in score. The bureau which gets the information of repayment will report a higher score and the one which does not have information will report a lower credit score.

Credit bureaus

CIBIL: CIBIL TransUnion is bureau that primarily uses FICO scores. Therefore, its credit score range aligns with the standard 300 to 850 range.

Equifax: Equifax uses the FICO scoring model, so its credit score range typically falls between 300 and 850, mirroring the standard FICO score range.

Experian: Experian also often uses the FICO scoring model but may provide different versions of the score. Its range is typically from 300 to 850.

Despite these variations, the underlying factors determining credit scores remain consistent across bureaus, including payment history, credit utilisation, length of credit history, types of credit, and new credit accounts.

Frequently Asked Questions:

How can you improve the credit score?

You can work on improving your credit score by making timely payments, reducing outstanding debt, and maintaining a healthy credit utilisation ratio (CUR) before applying for a loan.

Is payment of debt enough to maintain a good CIBIL score?

Paying off debt is indispensable to maintain a good credit score. However, it is a responsible financial management that leads to a good CIBIL score.

Can there be mistakes in credit reports?

It is not uncommon to spot mistakes on credit reports. So, regularly checking your credit score allows you to spot any errors, such as inaccuracies in personal information or incorrect reporting of payments.

How is average age of credit accounts calculated?

Average age of credit accounts is calculated by taking the sum of the ages of all your credit accounts and dividing it by the total number of accounts.

Does being a guarantor impact your debt burden?

Being a guarantor doesn't raise the debt burden but is seen as a potential debt. However, the lenders can consider the guaranteed amount while determining borrower's creditworthiness.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 01 Apr 2024, 06:22 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App