How could I be declined?

The other day I got a call from a guy that said “I have a 745 credit score and I was just declined for a credit card.” He was very upset and frustrated about this and understandably so.  As we went further with the conversation he told me the 745 he was referring to was his FICO score with Experian.  What he didn’t understand is that this particular credit card company only pulls credit reports from Transunion.  After doing some research we found out that his scores were 745, 722, and 608.  The 608 was his score with Transunion, thus the reason he was declined. 

Anybody who has ever been declined for a loan or credit card application understands this is a feeling they would love to avoid.  One thing that can help you avoid this is to understand that your score can be vastly different between the 3 main credit bureaus; Experian, Equifax and Transunion. 

The job of the credit bureaus is to gather information and store it in your file; they get this from lenders, public records and collection companies.  This information is then added to your file with each bureau and what many people don’t understand is that these bureaus do not share the information they have with each other.   The bureaus, which are commonly referred to as “the big 3”, are competitors.  Additionally, everything that is listed on your credit is voluntary information.  Banks, lenders and collection companies are not required to report your credit history to the credit bureaus and if they decide to report your account history they certainly do not have to report to all three of the agencies.  This explains why your FICO score is rarely ever the same with all three credit bureaus. 

We all understand that having a collection on our credit report is not something that is going to improve our score, but what if the collection company only reported the information to Experian.  If everything else is equal it would be safe to assume that our score with Experian would be lower than that of Transunion or Equifax.  In this situation we should be happy the bureaus are not sharing information.

Another example of why your scores vary from bureau to bureau are related to inquiries.    If you don’t understand how inquires work click here .  Inquires will never positively effect your credit score, and the only industry that will pull your credit report from all three bureaus is the mortgage industry.  So if you applied for a credit card today, usually they will only pull your report from one of the credit bureaus creating a hard inquiry with that bureau.  This action will hurt your score, but only with the bureau that the credit card company pulled the report from, thus reducing your score with only that company. 

There is a need to understand the importance of checking your credit report with all three bureaus.  It’s not a good practice to just check one of your reports and assume that everything is fine.  There might be information that is incorrect or not even yours that appears on one of the “Big 3” but not the others thus making that score much lower.  This could become very problematic if you need to apply for a loan or a credit card and the bank you are applying with only pulls from the bureau that has inaccurate information about you.

This concept is just one of the many that most people are unaware of or don’t fully understand.  The best time to work on improving your credit reports and scores is before you need them.  Fixing items on your credit report can take some time, so the sooner you start this process the better off you will be.

Author: Dan Beck

Dan Beck is a credit repair expert who teaches consumers how to create an "A Rated" credit profile. Would you like to receive a FREE Consultation with Dan? If so, click here.

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