Credit Filter: Why does TransUnion hate me?
February 6, 2012 11:08 AM   Subscribe

Credit Filter: Why does TransUnion hate me?

I get quarterly credit reports as a service from one of my credit card companies. Since the last report was sent, I bought a new car, and otherwise have done nothing out of the ordinary with respect to my credit (I pay my credit card bills off every month, so I'm not carrying a balance, and generally have good credit). I just got the latest report and both Equifax and Experian have both increased my credit score modestly (less than 10 points) while TransUnion's rating has suddenly dropped by over 40 points. I expected the rating agencies to have SOME reaction to the addition of a new car payment, but not to have such different reactions. Are Equifax and Experian just reacting slower, or does TransUnion hate me? What's going on here?
posted by axiom to Work & Money (9 answers total) 2 users marked this as a favorite
 
Have you looked at the actual reports in addition to the scores? I'm sure you know you can get them for free from annualcreditreport.com -- is there anything different on them?
posted by brainmouse at 11:12 AM on February 6, 2012


It's normal for credit scores from the different bureaus to vary by 50 points or so. This reflects not only the different data that they have on you but also, potentially, differences in scoring methods. A FICO score costs money, so often, unless the score actually says it's a FICO score, the scores you see are not actual FICO scores but third-party scores designed to mimic them. Since FICO doesn't make its model public, these will never match FICO exactly, and the scoring model used may even differ from bureau to bureau.

Is your new loan actually showing up on your TU report? If not (some lenders to do not report to all three bureaus) but the inqury is, that would explain it: a credit inquiry from a lender without a corresponding new tradeline from that lender implies that you have been turned down for a loan, which is a strong negative indicator in most scoring models. (It could also be that the new loan simply hasn't yet been reported to TU.)
posted by kindall at 11:13 AM on February 6, 2012


I'm not sure whether this is an actual FICO score or not (I do pay for this service, so it's possible that it is). The report shows that TU received both the credit inquiry and was informed of the auto loan (in fact it shows all 3 received notification of the auto loan, but Experian is not showing an inquiry), so it would seem that they know about both.
posted by axiom at 11:19 AM on February 6, 2012


I'm going to guess that when you financed the car, the lender accessed your TransUnion file, and not your EQ or EX files. Credit inquiries cause your score to decrease, so if no inquiries show on your EQ or EX files, you wouldn't have the score decrease there, but if there IS a new inquiry on your TU file, you would expect that score to decrease.
posted by rabbitrabbit at 11:26 AM on February 6, 2012


I'm actually surprised that the other scores went up. I would expect taking out a big loan to have a negative impact on your score. Theoretically, your ability to pay all of your debts goes down whenever you take on another loan. Also, it's not uncommon for people facing financial ruin to use all the credit they can before everything falls apart. It's not a problem for a moderate user of credit, the ding will go away after a few months. If someone's going for broke though, suddenly their behavior becomes self-limiting as those 40 point dings rack up with no time for their score to recover.
posted by TungstenChef at 11:29 AM on February 6, 2012 [1 favorite]


I should mention that most lenders that pull multiple scores understand that scoring is imperfect; that's why they pull multiple scores. Usually they will throw out the lowest, or use the middle score, or average the top two, or something like that. So usually having one score that's not in the same range as your others is not going to affect your ability to obtain credit. Also, it's normal for your TU in particular to be a little different than your Experian or Equifax, since some lenders don't report to TU. This too is something lenders are aware of.
posted by kindall at 11:29 AM on February 6, 2012


re: rabbitrabbit's point - Yes, an inquiry can cause your score to drop, but not by much at all - maybe about 3 points, according to some google searching I did, as a maximum, which is consistent with everything I have read and discussed. One inquiry could not possibly cause your score to drop 40 points.
posted by insectosaurus at 11:54 AM on February 6, 2012


It really depends on how big your credit file is, how long it is, etc. When I was rebuilding my credit, I did see big drops from inquiries. Now, though, not as much.

The fact that the other scores went up also makes me think the credit file isn't very large or long, because sometimes with a thin file, new accounts will give you a better credit mix and paradoxically cause your score to rise. No auto loans = less stuff to rate you on, so a new auto loan, with no adverse marks on it, will actually give you a better score.
posted by rabbitrabbit at 12:16 PM on February 6, 2012


TungstenChef had the right idea, at least in my case. The TU score eventually recovered to be more-or-less on par with the others.
posted by axiom at 8:44 PM on May 12, 2012


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