Credit reports - why are there three different scores?

Discussion in 'Business & Economics' started by wegs, Sep 5, 2019.

  1. wegs Matter & Pixie Dust Valued Senior Member

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    Why does Experian, Transunion and Equifax all report differing credit scores? Not by a wide disparity, but still. Why?
     
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  3. Seattle Valued Senior Member

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    I'm not an expert on this but I did have to use them in one of my first jobs out of school (and not since then). It's not a science. Anyone using them is using them subjectively along with other individual company criteria. The score itself probably means different things for each reporting company.

    You could have 3 different job interviewers for a particular company and it wouldn't be surprising if they each ranked the job candidates slightly differently. It's the same with credit scores.

    What you are typically really looking at is their credit history and not so much the score. The score just helps if you are approving credit on a mass scale such as for credit card companies.

    I'm sure the know-it-alls will be along shortly to rant about corporatism, sub-prime credits, global capitalism, etc.
     
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  5. Sarkus Hippomonstrosesquippedalo phobe Valued Senior Member

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    Different algorithms used in the scoring. If you have 3 factors (A, B, and C) being considered, then one credit report might weight them equally, another might favour A over B and C, and another favours C etc.
    The algorithms will be established on some overall analysis of things like default rates, and the relative factors of those who defaulted. That way they try to weight those factors A, B, and C to arrive at a prediction of the likelihood you are to default, etc. But assuming they all developed their algorithms separately then it's unlikely they'd be the same. And as Seattle said, the scores might also mean different things in each case.

    [insert rant about corporatism, sub-prime credits, global capitalism, etc]

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  7. iceaura Valued Senior Member

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    I'll take that bet. I'll give you odds.
    When? How long do we have to wait before you acknowledge the fact that your professionally inculcated fantasy pov has once again led you into the weeds of troll folly?
    The Bandar-log were modeled on people. Rumors that the people modeled were Chicago School economists are false - although the rumor is otherwise plausible, the school did not yet exist.
    Since a good share of their competitive advantage - what they sell when they sell their services - lies in the differences between their algorithms, we do not need the assumption of "independence". That's good, because a lot of that stuff was based on taxpayer funded research.
     
  8. RainbowSingularity Valued Senior Member

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    they only produce the reports to make money
    if they all made the same result then the massive companys paying huge money to pretend they are being comprehensive would have no way to justify paying for 3 services when they all get the single result

    it also is a good way to pretend they dont need government regulation

    like a casino offering free(table play only) chips(or free alcohol) to people on low incomes who have a much higher rate of gambling addiction.

    they do it for money
     
  9. RainbowSingularity Valued Senior Member

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    asset to liquidity bad debt factors are probably a bit of a niche compared to over all market

    governments regulate bad debt and so in doing pay big company's billions of dollars in low cost lending in exchange

    risk reports Vs Credit Reports...
    i doubt wegs is talking about risk reports

    the average consumer perceives credit reports as personal credit values rather than over arching comprehensive business analysis.

    and ... like anything that requires human interpretation
    if there is no variation, you dont know for sure its not all faked or completely wrong
    refer 2008
    sub prime mortgage security asset liquidity insurance
    exposure etc...
    they now have a real world invested interest to make sure it appears they are not all just eating pies(coke & hookers) and watching TV(living the materialist consumer 5 star life off management fees for doing no actual management as the investment gets burnt)
     
  10. Seattle Valued Senior Member

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    Rainbow, the gift that keeps on giving...
     
  11. RainbowSingularity Valued Senior Member

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    the door will only close when you stop sticking your penis in it
     
  12. Seattle Valued Senior Member

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    Ah, words to live by I guess.
     
  13. wegs Matter & Pixie Dust Valued Senior Member

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    Lmao
     
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  14. RainbowSingularity Valued Senior Member

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    fruitful encounter as it has just posed a question for me
    does Ego drive drug addiction ?
    note global opioid pandemic
    quite financially linked too
    im not saying give free self helps books to hospital patients or junkys...
    but driving culture is how you change cultural problems and Ego drives those by group models of normative behaviour culture models.
    be those B&D or puritanical A-sexuality
     
  15. Seattle Valued Senior Member

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    Is the ego substantially different in those addicted to opioids than in those not so addicted?
     
  16. wegs Matter & Pixie Dust Valued Senior Member

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    You've both helped me understand this a bit better, thank you. Why do credit scores dip if you simply apply for a new line of credit? This isn't always the case, but sometimes.
     
  17. Seattle Valued Senior Member

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    It can mean that you may be applying to too much credit in too short a period of time. Banks what to lead money to you mainly if you don't need it.

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  18. RainbowSingularity Valued Senior Member

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    Excellent question
    where rubber meets road it tends to be all mixed in with concepts of exterior blame projected toward a physical manifestation.
    however, we clearly see and hear about first time users who get addicted supposedly immediately and then over dose and die.

    attempting to define that as the same as someone on long term pain medication taking various different medications probably doesn't help address the psychological component.

    addiction as a social behavior is Strongly and continuously reinforced by advertising and culture & institutions.

    i.e eg
    all the wall st bankers who crashed the global markets and killed thousands of people and made hundreds of thousands jobless and homeless...
    were they addicted to greed or were they consciously choosing to kill and destroy people and society ?
     
  19. Sarkus Hippomonstrosesquippedalo phobe Valued Senior Member

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    Are you seeing the difference as the Risk report being used by companies, and Credit reports being for individuals? If so they're not dissimilar - just a different focus. One's credit/risk score goes up and down depending on how risky they are in terms of being able to pay back credit or investment. Someone with a score of 400 will be less risky than someone with a score of 200. A company with a rating of AAA (at the top of the "investment grade" ratings) will be much less risk for both lending to and investing in than one at CCC (considered "junk" for investment purposes).
    In terms of an individual's Credit Report, it looks at the publically available information on the individual: payment history on debt, debt utilisation, bankruptcies, legal judgements against you, even whether you are registered to vote etc.
    Risk reports on companies will use far more financial and non-financial information simply because more information is available. The algorithms would take into account many financial ratios, and some/most agencies will even provide a recommended maximum credit limit. They can do this because they can tie the rating they provide to the company's revenue and net worth (plus other factors), whereas an individual's credit report has no information about net worth or annual income, which is why when you're looking for a loan the lendor will/should always ask for that info. But the score on their credit report is still a risk score.

    If this isn't the distinction you mean, then you'd have to explain, please.

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  20. Sarkus Hippomonstrosesquippedalo phobe Valued Senior Member

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    It is assumed that you are taking more on credit, thus will owe more to people. If you are lending money to someone it is generally better if they don't owe too much to anyone else, so that if/when you default your assets won't be shared between too many other lendors. So the more lines of credit you have, the higher the risk you become to future lendors.

    Interestingly, if you've never applied for credit you are likely to have a lower score than those who have a demonstrable track record of good repayment.
     
  21. RainbowSingularity Valued Senior Member

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    yes & no
    extremely concise and well worded post

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    i did mean it but only from the side of the entity running the report as a comparative factor of the entity's own risk reports against projected credit reports for potential clients/customers

    entity A runs credit report on a customer
    value of the credit report on the customer as a risk factor for the business
    Vs
    the business risk reports of the market place risk to capital & business financial continuity.

    cross reporting values to amalgamate a risk value to the credit(consumer/customer) being evaluated(by the business).

    not my area, so some things are a bit foggy and muddled...
    is this called an "exposure report" at what level of risk the business is exposed to as a factor of the environment to its customer base credit rating... ?

    i.e/eg
    "what risk is our company operating in as a environmental risk to the value of the business capital as a market"
     
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  22. Sarkus Hippomonstrosesquippedalo phobe Valued Senior Member

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    Ta

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    Ah, sort of a market and evnironmental (financial) risk analysis that the entity will condut upon itself? Yeah, don't think wegs is asking about that.

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    She's very much looking at the consumer end of things.
     
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  23. RainbowSingularity Valued Senior Member

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    i imagine those will be doing over time over the next 2 years given the fluctuation of supply & demand on consumer credit & small scale income risk of customers etc.
    i am expecting governments to start quantitative easing shortly on select sectors for maintaining short term cash flow as things settle over the next 2 to 3 years depending on how the next run of elections go UK USA Europe etc.
    im guessing that shall muddy the waters somewhat for currency reserve values off setting liquidity for medium businesses with international exposure to service small scale retail(retail consumer products home wares etc) processes as they take up the bulk of the hit in down sizing.
    assuming they have not got those financial specialists on speed dial already lol
     

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