Learn why your credit score can differ between bureaus, and how you can improve it, to open up future financial opportunities.
6 November 2024 · Fiona Zerbst
Your credit score is a three-digit figure that reflects your financial reliability and creditworthiness. However, you might notice that this metric varies, depending on which credit bureau you consult.
We explore why credit scores differ between bureaus, and what this means for you as a borrower.
Tip: Check your credit score for free on JustMoney.
Your credit score is a three-digit number that represents your credit history and financial reliability. It gives lenders a good indication of whether or not you’re likely to default on debt.
“If you want to apply for credit to buy a home or car, for example, your credit score indicates the likelihood of your credit application being successful, or whether your loan application will attract a more favourable interest rate,” says Shashika Dhurup, director of product management at TransUnion.
“A poor, unfavourable, or below-average score indicates that you may present a higher risk to the lender, and that you have some work to do to improve it.”
Although your score is just one aspect of your credit report, it is the most visible indicator of your credit behaviour, which is why many consumers use it to track their progress and monitor the impact of their financial decisions.
Credit bureaus receive credit information from various lenders, and use this to compile a detailed report on your credit behaviour.
They do not decide whether you qualify for credit; instead, they calculate statistical probabilities based on the information they receive. The essential question they address is, are you likely to pay reliably, or is there a good chance you could default on a loan?
South Africa has four main credit bureaus – Experian, TransUnion, VeriCred Credit Bureau (VCCB), and Xpert Decision Systems (XDS) – and more than 50 other registered, niche credit bureaus.
Follow the link for the complete list of credit bureaus registered with the National Credit Regulator (NCR).
Experian is a global information services company with a strong presence in South Africa. It provides free credit reports and scores on My Credit Check and the web-based app Up.
TransUnion is a global information and insights company. It has developed its own proprietary credit scoring software, CreditVision, and generic scores to assist lenders. You can get a free credit report and tap into credit education on the South African website.
VCCB is a South African credit bureau that offers data and analytical services. You can access your free credit report, learn about your credit score, and dispute any incorrect information. You can also view your VCCB report on JustMoney.
XDS is a South African credit bureau offering various credit scoring models. You can access your XDS credit profile and score via Splendi, and dispute incorrect information online.
Your score summarises, numerically, the information in your credit report, following an assessment of your credit history. It indicates how your credit standing compares with that of other consumers, says Dhurup.
It also reveals your credit repayment reputation, says Ans Gerber, head of data insights at Experian South Africa. “It tells lenders whether you’re able to manage debt responsibly.”
Your credit history is reflected in the data credit providers are required to submit to the South African Credit and Risk Reporting Association (SACRRA), which distributes this information to registered credit bureaus.
Bureaus filter the information using different scoring models. The data originates from the same sources, but your score may differ from one credit bureau to the next, as the bureaus have different approaches to building the risk score models that calculate your credit score.
The same general principle applies, however – the higher the score, the better your credit reputation. “A high score is associated with good, disciplined, and trustworthy behaviour, which could be reflective of specific types of credit, that is, secured versus unsecured credit,” says Gerber.
Gerber notes that the same score could be deemed “excellent” at one bureau and only “good” at another.
“This is because the scorecards themselves differ, with different data features used, and different credit score calculations employed,” she says. “To differentiate between ‘good’ and ‘excellent’ score categories, one must consider the score ranges, rather than the scores themselves.”
Paul Yon, CEO of VCCB, explains, “No two scorecards are alike – if you score 660 at VCCB and 660 at TransUnion, these scores are not equivalent.”
However, the score itself isn’t the most important measure of creditworthiness, he explains. Instead, consumers in certain score bands tend to show consistent behaviours, so moving into a higher band can be beneficial. When interpreting your score, you should consider the associated band to understand whether you fall into a high-, medium-, or low-risk category.
Another point to consider is that your direct-to-consumer score (that is, the score you see on a website) is not the same score a lender may apply. For example, a lender may use their own score to calculate risk, while your bureau credit score can function as an educational tool that provides an overview of your creditworthiness.
Your aim should be to improve your creditworthiness – and your score will improve consequentially.
Gerber notes that making at least the minimum payment on your credit accounts and loans – and on time – will have a positive impact on your score.
However, if you’re under debt counselling, you will not qualify for new credit – even if you’re disciplined in paying the newly negotiated amounts on time. “These aspects will always be true – regardless of the credit scoring model,” she points out.
Dhurup says the sources of data that a credit bureau may receive are prescribed by the National Credit Act and uniformly submitted by all data contributors.
“How this data is displayed may, however, vary from bureau to bureau due to data quality, or where a credit bureau receives specific updated consumer information,” she says.
In theory, all credit bureaus should receive the same data, but slight variations may occur due to the timing of data updates, and how quickly credit bureaus process and incorporate new data. There may be delays in reporting from some credit providers, or errors in data submission, which may be caught and corrected at different times by different bureaus.
“Additionally, a wealth of data features can be derived from source data, and the specific data features that are eventually included in the scoring model can differ from one credit bureau to another,” says Gerber. “The data features are used to improve the algorithm’s accuracy or ‘scorecard’, as we often refer to it.”
Credit data is typically released monthly, but late submissions may occur due to technical issues, administrative delays, or data quality checks. So, your credit report may not always reflect your most recent credit activities.
Late reporting or delayed updates can affect your credit score and creditworthiness, leading to inaccurate assessments. Late reporting can also lead to credit report disputes if consumers notice differences between their actual credit situation and what’s reported.
In the past, there have been instances of partial or selective reporting by credit bureaus. Some bureaus had preferential relationships with specific lenders, and not all credit providers reported to all credit bureaus.
However, reporting practices were standardised with the introduction of the National Credit Act, the establishment of the National Credit Regulator, and the creation of SACRRA.
Note that there can be slight variations in core credit data, related to the timing of data updates or the use of additional, non-traditional data sources, such as government data, social media, or data from utility companies and telecommunications providers.
The South African market mainly uses proprietary models for credit scoring, while FICO and VantageScore are analytics used by US-based companies.
The FICO score is a three-digit number between 300 and 850. It is mainly used in the United States, but TransUnion uses FICO Score 6 in South Africa. This model uses data specific to South Africa, such as local payment histories, credit histories, and public records to provide a more accurate picture of a borrower’s creditworthiness.
VantageScore, a global credit scoring model, uses a scoring range of 300 to 850. The model was collaboratively developed by Experian, TransUnion, and Equifax, and is used by large banks.
Proprietary models are credit-scoring models developed and owned by individual credit bureaus.
They’re often kept confidential and may incorporate unique factors or algorithms that differentiate them from other models. The specific model usually depends on the type of credit being assessed.
Like other credit scoring models, proprietary scoring models consider various factors, including payment history, debt utilisation, length of credit history, enquiries for new credit, and public records concerning collections, judgements, or insolvencies. However, proprietary scoring models may place different emphasis on these factors or use additional data points specific to the credit bureau’s methodology.
Scores may vary because of several factors.
In South Africa, credit scores can change by 50 to 100 points within a month or two. For example, if you miss a single payment on a credit account, your score could drop by 60 to 90 points, and if you pay off significant debt, or establish a pattern of on-time payments, your score could increase by 80 to 120 points.
Taking out a new loan or credit card could initially decrease your score by 30 to 50 points, but if you manage the new credit well, it can recover. Multiple credit applications in a short period of time will cause a sharp decline, as this indicates that you may rely too heavily on credit.
If you use all your available credit, “maxing out” your credit card or other credit accounts, your score can decline sharply. In addition, if you close a long-standing account, your score could decrease by 40 to 70 points, if the closure significantly affects your credit utilisation ratio – this being the amount of credit that you use, compared to the total amount available to you.
“You may be very good at repaying your home loan, which will lead to an ‘excellent’ rating in your secured credit score. However, if you’re less disciplined about paying your personal loan, which can lead to a ‘below average’ in the unsecured credit category, you’re injuring your score,” says Gerber.
“When combining all your data, the overall credit score could turn out to be average.”
If you have a limited credit history, any changes – for example, opening or closing a new account – can significantly affect your score. The “age” of credit accounts has an effect, too, so expect a drop if you close a long-standing account.
Judgements or legal actions relating to debt can cause a severe drop in your credit score – but clearing your record can have the opposite effect over time.
Finally, errors in credit reports can cause changes, but correcting these can lead to substantial improvements. It’s vital to check your credit report regularly as errors can occur.
The National Credit Act (NCA) stipulates that you’re entitled to one free credit report a year from each credit bureau. You can check your credit score more often, however, via intermediary credit score platforms.
If you check your score regularly, you can opt for free or paid access. Free access ensures access to basic credit information, while paid services offer more comprehensive and frequent insights.
Check your credit score with any major credit bureau, such as Experian, TransUnion, VCCB, and XDS. You can also check your credit score with JustMoney.
If you find discrepancies in your credit report, file a dispute with the relevant credit bureau, and provide documents that support your claims. Every credit bureau has its own dispute process.
Yon notes that credit bureaus are required to investigate your dispute within 20 business days and will provide you with the results of their investigation. “You can also query your credit score if you wish, but this doesn’t fall into the 20-day dispute resolution ruling,” he says.
You’re entitled to a free copy of your updated credit report if any changes are made. If you’re not satisfied with the resolution of your dispute, contact the National Credit Regulator.
Check your credit report periodically to ensure that any changes agreed to have been implemented.
You can check your credit score free of charge with JustMoney. The platform allows you to monitor changes in your credit score and ensure your credit performance is consistent over time. This will put you in a solid position to achieve your financial goals.
“Your objective is to maintain good credit health, which means your score is just a barometer, or measure,” says Yon. “Consumers can get hung up on credit scores, but a credit decision isn’t made solely on the strength of a credit score. It simply indicates how likely it is that you’ll qualify for a credit product.”
To get a comprehensive picture of your credit health, check your credit report at all the major credit bureaus to understand which risk bands you fall into.
If you wish to improve your credit score, Yon recommends you focus on one credit bureau score and monitor it regularly, considering how your credit behaviour might take you into a higher scoring band.
Ultimately, your focus should be on improving your credit behaviour, opening doors to a broader range of financial opportunities in the future.
FAQs
Why does my credit score change so frequently?
Credit bureaus usually update their information once a month as they receive new payment data from credit providers. In addition, changes to any of the factors that contribute to your score can affect it – for example, if you miss a payment, increase your credit utilisation, or frequently apply for new credit.
Which credit score is most accurate?
All credit bureaus registered with the NCR can be trusted. They must comply with the NCA and are legally obliged to ensure fairness and accuracy.
There is no single “best” credit bureau and no one credit score can be considered the most “trustworthy”.
Also make sure there are no errors in your credit report that could affect your score.
How can I ensure my credit data is accurate across all bureaus?
To ensure your credit data is accurate across all bureaus, monitor your credit report regularly to identify any errors or inconsistencies.
If you find errors in your credit report, dispute them immediately with the relevant credit bureau. Make sure you can supply documentation to support your claim, and follow the bureau’s dispute resolution process.
Consider using a credit monitoring service, which can help you track changes to your credit report and alert you to suspicious activity.
Does checking my credit score lower it?
It’s a myth that checking your score frequently affects it, says Dhurup. “You can check your credit report and score without triggering any penalty.”
It’s wise to check your report regularly to monitor it for errors or fraudulent activity.
“Hard enquiries” (when a lender checks your credit report to assess your creditworthiness) can negatively affect your credit score. However, checking your own score is a “soft enquiry” and has no effect.
How long does negative information stay on your credit report?
Credit bureaus retain various types of credit information for different maximum periods.
For example, if you’re marked as a bad payer, this status will remain on your credit record for one year, or the period specified by Section 71A of the NCA.
If you have negative information on your credit report, it’s essential to take steps to improve your credit score. This may involve paying off debts, disputing errors, and using your credit responsibly over an extended period.
Over time, positive credit habits can help counteract the effects of past mistakes.
Knowing your credit score can give you insight into your eligibility for lending products. Check yours on JustMoney – it’s easy, and always free.
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