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Why do different credit bureaus have different credit scores?

05-Jan-2017 written by : FSI-Team

In the modern world that we live in it is nearly impossible to find someone who is not servicing at least one or two lines of credit. It will be no exaggeration to state that we live in a credit dominated world. It is therefore important for one and all to know about his credit score. Although there is no dearth of information available in the web space about credit score and the need to maintain a high score, there is a misconception about people that there is only one credit score.

This is primarily because CIBIL is India's premiere credit bureau and the CIBIL score is the most referred to by banks during the credit assessment by an individual. This however does not negate the fact that there are three retail credit bureaus namely Equifax, Experian and Crif Highmark apart from CIBIL and each credit bureau has a different score that falls in separate bands. The higher your score in each band, the better your credit history is regarded to be. Let us now delve into the reason why different credit bureaus have different credit scores:

Credit scoring model differs from one bureau to another

Like no fingerprints are the same, the credit record of two individuals cannot be exactly mirrored. In the very same manner no credit scoring model is identical. Thus, a CIBIL rating online of the same individual will vary from the rating of Equifax and Experian and so forth. Each bureau follows its own scoring model and considers different factors that influences the making of a credit score. For example, different scoring models may be used for a home loans and vehicle loans in one bureau, which others may use the same scoring model for secured loans such as the ones mentioned above but have a different scoring model for unsecured loans.

The range of credit score

Like we mentioned above, each credit score from different credit bureaus fall in different credit bands. The CIBIL score band is the range of 300-900, Equifax score ranges from 1-999, Experian score ranges from 1-1000 and the Highmark score in the range of 300-850. The higher you score in each score band the better the chances of your credit application getting approved. However, since each credit score is in a different band this score of an individual may wary from one bureau to another.

Reporting pattern of lenders

Your credit history does not automatically get uploaded to the servers of the credit bureaus as soon you avail of any kind of credit. Lenders must have a subscription and register with one or more credit bureaus to pass on borrower information. While some lenders may choose to subscribe to a lone credit bureau, others may wish to send the information to all four bureaus. Further information about the same line of credit may be sent at different times to different bureaus. The timing of information passage therefore becomes an important determinant of the score.

Which is the best score?

The simple answer to this question, that there is no such thing as one best score. While each credit bureau individually would like you to believe that their credit score or the credit assessment carried out by them is perfect and thus the best, the fact is that all scores are basically founded on the same principle of maintaining credit discipline. Thus, if you have a good credit score consistently, it is likely that you will be maintain a high score with the other bureaus as well with minor variations.

In a nutshell, here is what you need to do to maintain a high credit score:

  • Make timely repayments on all credit line
  • Keep your credit utilisation low
  • Maintain a good balance between secured and unsecured credit
  • Not apply for too much credit in too short a time
  • Keep a periodic vigil over your credit score

How you should keep track

With four credit bureaus in India, a lot of lenders are making it an internal policy to refer to more than one credit score of an individual for proper credit assessment. Further a prospective employer may ask you to submit your credit report from at least one bureau while assessing your candidature. As a borrower and a user of credit it is a good idea to pull out the credit report of one more credit bureau along with your CIBIL report. If you have done all it takes to maintain a good score, it is likely that your score will be high across all bureaus. Having access to two credit reports in a year will therefore serve as a confirmation of the fact that you are doing things right and your credit health is order. This will also boost your confidence when you need credit.


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