Why Is One Credit Score Different From the Others?

If you,ve recently ordered copies of your credit reports, you may have noticed some funny things. You have three different credit scores, for one thing. There is one score for each of the three major credit reporting companies, Equifax, Experian, and TransUnion. These three companies should, ideally, give you similar credit scores, as their calculation procedures are basically the same. Sometimes, though, there can be a dramatic difference between the scores from these companies. Many consumers are confused and curious as to why this happens. There are a couple of reasons for it.

One of the natural reasons that this happens is that not every creditor reports to all three credit bureaus. Any time you take out a major loan, such as a home loan or a car loan, that should go to all the bureaus. Credit cards that you get through major credit card companies like Visa or MasterCard will go to all three companies, too. Information from smaller companies, though, such as cash advance places, apartment and utility companies, etc. may not go to all three companies. Sometimes your landlord might just report your late payments to one of the companies, which means that you'll have an extra strike against you on this report.

Another reason that one report might look different from the others is more frustrating: credit bureau error. A recent study estimates that about 80% of credit reports contain errors, which can seriously wreck the overall credit score of a consumer. If one of the companies makes a mistake, the other two aren't likely to make that same error. This can make your credit report and resulting score very different for that one company.

You can avoid the first problem by asking your creditors and other relevant people which credit bureaus they report to. Sometimes if you?re trying to rebuild credit, it's best to make sure that every company who is related to your credit will report to the bureau so that you have the best possible chance of rebuilding your credit quickly.

To fix the second problem, though, you have to do a little more work. Luckily, in the Internet age, you can dispute inaccurate credit report claims online. Just contact the company to let them know what the problem is. They're required to respond within a short time period. If you have trouble with this process, you can get a little help from specific credit repair tools that can help you write letters of complaint to the company with the inaccurate information.

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Divorce Can Certainly Affect Credit Scores

You may believe that you can keep your own financial identity when you get married, but the truth is that you will be come tied to your spouse in many more ways than you ever expected. Even if a split is amicable, it can leave you in financial trouble. Throughout the marriage, it is very likely that the finances will merge, and that one partner will take the majority of responsibility when it comes to paying the household bills. If a divorce occurs, these are the things that can lead to credit problems.

You must remember that divorcing does not end the shared financial responsibilities. If your spouse has credit problems, these problems will continue to plague you long after a divorce. There are several ways, however, that you can protect yourself from the credit problems that a divorce might bring. First of all, make sure you are aware of the accounts for which you are responsible. By assigning responsibility, there will be fewer arguments down the road.

A huge step is to dissolve any joint accounts. This does not just apply to bank accounts, but also car loans, mortgages, insurance, and utilities. This will save you a lot of heartache later as it will keep you from trying to split everything down the middle. You will also be responsible only for your personal finances, which will remove the possibility of paying for your spouse’s mistakes.

You may find it hard to part with your home, but selling the house after a divorce is really the best idea. Of course, it is harder if there are children involved, because they will already feel as if their world is slipping out from under them. From a financial perspective, though, it is better in the long run to sell the house and split the profits, rather than attempt to care for the house on your own. In some cases, one spouse found a credit rating ruined when the other spouse allowed the house to slip into foreclosure.

Lastly, be sure to document everything. Keep accurate records so that you can back up any claims in court. Divorce is certainly hard enough without adding the financial burdens on top, but you can find ways to protect yourself. It is not cold-hearted to take these steps immediately, either. After all, most people want to get their life back to some semblance of normal as soon as possible.

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How Credit Inquiries Can Affect Your Score

There are two different types of inquiries that may appear on your credit score. One is the soft inquiry, which is a look at your credit report for any other reason besides a purchase. This could be your own inquiry into your credit score, a potential employer’s inquiry, or for pre-approval purposes. A hard inquiry is a credit score check for the purposes of making a purchase. These hard inquiries will appear on your credit score, and a rejection can adversely affect your report.

All inquiries are recorded on your credit report, even the inquiries that you make for yourself. If you have several hard inquiries on your credit report, then potential lenders may believe that you are attempting to spend outside of your current means. This does not mean that you cannot shop around for a loan. Though all inquiries show up on the credit report, those that are similar and take place around the same time will end up grouped together as one hard inquiry.

Another benefit of having each inquiry reported is that you can receive early warning if someone attempts to apply for credit with your name. If you regularly receive credit reports, you can easily spot any unusual activity. This is why it is a good idea to subscribe to credit monitoring programs, though you can keep an eye on your score without outside help.

You need not worry that unauthorized individuals can receive your credit information. According to the Fair Credit Reporting Act, only legitimate business entities can access your credit reports. These inquiries will remain on your credit report for up to two years from the original placement. You can dispute any inaccuracies, but they will not be removed without hard proof that the report is incorrect.

It is very important that you keep a close eye on your credit report and scores. You will need good credit for many more things than you might imagine, and maintenance is the easiest way to ensure that you receive no surprises when you are preparing for large purchases. Keep the hard inquiries to a minimum, if at all possible, and remember that inquiries to certain credit reports will only appear on that particular credit report. For instance, if your car loan lender only checks the TransUnion credit report, then your inquiry will not appear on the other two reporting services.

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The Importance of Good Credit

Even if you are not planning a major purchase, such as a house or a car, in the near future, your credit score is still important. Many businesses and service providers are relying more and more on good credit scores before offering goods and services. You may find yourself in need, without anywhere to turn.

You must have good credit to find a place to live. You may not be interested in buying a home, but landlords will check credit scores, too. Your landlord will want to be sure that you have a history of paying your bills on time, and a bad credit report will tell them everything they need to know. Without good credit, you may be denied the house or apartment that you wish to lease.

If you are applying for a new job, it may surprise you to know that your potential employer will want to check your credit. This is especially true in positions with fiscal responsibility, because your employers will want to know that you can demonstrate financial responsibility. In addition, the employer may want to know if your level of debt is too high for the salary that your intended position offers.

You may also find that you are without certain utilities if you have poor credit. Utilities companies believe that each month of utilities that they provide could be considered a loan, which you pay at the end of each month of service. If you do not demonstrate good payment practices, utilities companies may be less likely to offer their services. You may be able to come to an agreement that will allow you to use the water, gas, phone, or cable services, but you will probably have to offer a sizeable deposit before you can use the services.

These are all excellent reasons for cleaning up and maintaining your credit score. You will find that the fastest way to improve your credit score is to make your bill payments on time, every time. When you know that there will be a problem with your monthly payment, it is in your best interest to contact your creditors and make them aware of the problem. A little bit of communication can go a long way to protect your credit standings. By taking responsibility for your finances, you can begin to show your creditors that you are worth the risk that they will take.

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