Why Your Credit Reports May Be Vastly Different From Each Other
A guest post by John Ulzheimer, nationally recognized credit expert
If you recently pulled your three free annual credit reports you might have been surprised to learn that your credit reports are actually quite different from one another. Many consumers are very troubled by the fact that their three credit reports are so inconsistent. After all, many consumers would ask, doesn’t it make sense that all of my credit reports would be consistent and thus contain the same data?
In reality it would be extremely rare for a consumer to have three truly identical credit reports. Let’s take a look at some, but certainly not all, of the reasons why your credit reports are likely to be different.
1. Credit reporting agencies do not share data.
In the United States there are three different major credit bureaus, also known as credit reporting agencies. The major credit bureaus include Equifax, Trans Union, and Experian. Each credit reporting agency collects data regarding the credit management habits of over 200 million individuals. Once the credit data is compiled it is sold to lenders, credit card companies, employers, and any other party that has a legal right to see it. Contrary to what many believe, the credit reporting agencies are competitors. Due to this fact they do not share consumer data with one another.
2. Not all businesses report to all 3 credit bureaus.
Lenders have a choice regarding whether or not to report information about their customers’ payment habits to the credit reporting agencies. Credit reporting is 100% voluntary. There is no law which compels lenders to report information to the credit bureaus. Reporting to all three credit bureaus requires quite of bit of work on behalf of the lender. Because of this fact there are numerous lenders, especially smaller lenders and local credit unions, who will choose not to report to all three credit bureaus but will rather report to only one or two. Naturally, the fact that certain accounts may not be evenly reported to all three credit bureaus can cause quite a difference in a consumer’s three credit reports.
3. Inquiries are typically not equal on all credit reports.
When you apply for financing a record of the application appears on your credit report. The record of the application is called an inquiry. The vast majority of lenders will pull all three of your credit reports when you apply for a mortgage. This causes mortgage inquires to show up on each of your three credit reports equally in most cases. However, other creditors will usually only pull one of your three credit reports when you apply for financing. The fact that credit reports are not pulled from all three credit bureaus equally for every loan application is another common reason for differences between your three credit reports.
4. Public record reporting inconsistency.
Courthouses do not actively report public record information to consumer credit reports, like a lender would report a credit card or an auto loan. Instead, the credit reporting agencies themselves use public record gathering services to proactively collect public record information from courthouses. There tends to be a lot of inconsistency in public record reporting between the three credit bureaus.
Bankruptcy reporting is very consistent and typically a bankruptcy will end up on all three credit reports. However, tax liens and judgments often will not appear across all three of your credit reports. This is due to the fact that each credit reporting agency sets their own policy regarding which public records they will collect and which public records they will ignore.
There can actually be numerous other reasons in addition to the four listed above, which can lead to inconsistencies between your three credit reports. Having said that, there really is no need to stress over these inconsistencies. Credit report differences are a simply a fact of life and there is nothing that you can do to change them. Rather than wasting your time trying to “equalize” your credit reports you would benefit more by simply maintaining positive credit management practices.