On Tuesday afternoon, consumers took to Twitter to express their frustration over their credit scores on Credit Karma, the personal finance company owned by Intuit.
The issue for most wasn't that the credit scores they were finding on the Credit Karma website were low—rather they were too high.
Consumers tweeted about going to apply for a credit card or loan thinking they have good or excellent credit, only to soon find that the credit score that the card issuer or lender pulled was lower than what they saw on Credit Karma.
The specific tweet that started off the conversation can be found here. Twitter users were quick to follow up and joke about how inflated their credit scores looked on Credit Karma.
But they were on to something important when it comes to checking your credit score.
Below, CNBC Select breaks down why you can expect your credit scores to differ, depending on where you check them.
Why your Credit Karma credit score differs
There are multiple reasons why your credit score differs between what a personal finance website tells you and what your credit card company or a prospective lender find.
This is mainly because of two reasons: For one, lenders may pull your credit from different credit bureaus, whether it is Experian, Equifax or TransUnion. Your score can then differ based on what bureau your credit report is pulled from since they don't all receive the same information about your credit accounts. Secondly, different credit score models (and versions) exist across the board.
As it states on its website, Credit Karma uses the VantageScore® 3.0 model. VantageScore may look at the same factors that the other popular FICO scoring model does, such as your payment history, your amounts owed, your length of credit history, your new credit and your credit mix, but each scoring model weighs these factors differently.
For this reason, VantageScore and FICO® Scores tend to vary from one another. Your VantageScore® 3.0 on Credit Karma will likely be different from your FICO Score that lenders often use.
If you plan on applying for credit, make sure to check your FICO Score since there's a good chance lenders will use it to determine your creditworthiness. FICO Scores are used in over 90% of U.S. lending decisions.
Take note of the FICO Score version you look at as well. The FICO® Score 8 is widely-used and can help you gauge which credit cards you qualify for. But there are also industry-specific FICO Scores to use when you are planning a certain purchase. For example, FICO® Auto Scores are ideal if you want to finance a car with an auto loan, while it's good to check FICO® Scores 2, 5 and 4 if you plan tobuy a house. Check out the full list of FICO's score versions for different financial products here.
How to check your FICO Score for free
*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
FAQs
Why Are My Credit Karma and My FICO Scores Different? VantageScore and FICO are the two big rivals in the credit rating business. Credit Karma uses VantageScore. Their models differ slightly in the weight they place on various factors in your spending and borrowing history.
What is the Credit Karma controversy? ›
The Federal Trade Commission is launching a claims process for consumers harmed by Credit Karma's practice of misrepresenting that consumers were “pre-approved” for credit card offers. According to the FTC, many consumers were denied, costing them time and subjecting them to unnecessary credit checks.
Why did Credit Karma score go down? ›
Credit scores can drop due to a variety of reasons, including late or missed payments, changes to your credit utilization rate, a change in your credit mix, closing older accounts (which may shorten your length of credit history overall), or applying for new credit accounts.
Why did my credit score drop 40 points after paying off debt? ›
It's possible that you could see your credit scores drop after fulfilling your payment obligations on a loan or credit card debt. Paying off debt might lower your credit scores if removing the debt affects certain factors like your credit mix, the length of your credit history or your credit utilization ratio.
Is 700 a good credit score? ›
For a score with a range between 300 and 850, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered to be excellent. Most consumers have credit scores that fall between 600 and 750. In 2023, the average FICO® Score☉ in the U.S. reached 715.
Who is more accurate, Experian or Credit Karma? ›
Experian vs. Credit Karma: Which is more accurate for your credit score? You may be surprised to know that the simple answer is that both are accurate. Read on to find out what's different between the two companies, how they get your credit score, and why you have more than one credit score to begin with.
Is Credit Karma a sham? ›
The answer is, “No.” There's no catch. No strings attached. We're not a scam. You can rest assured Credit Karma has your back.
Is something wrong with Credit Karma? ›
User reports indicate no current problems at Credit Karma
Credit Karma offers free credit scores, reports, and insights. Get the info you need to take control of your credit.
Who is behind Credit Karma? ›
Credit Karma was founded in 2007 by Kenneth Lin, Ryan Graciano, and Nichole Mustard. It is headquartered in Oakland, Calif.
What's better than Credit Karma? ›
WalletHub is a decent Credit Karma alternative for people who want free access to their credit scores and not much else. Like Credit Karma, WalletHub provides education about financial topics and makes recommendations for financial products — but in a much more transparent way.
This is because Credit Karma makes use of another credit scoring model compared to many lenders and possibly does not have access to all the data required to calculate your credit score.
Why is my credit score 100 points different on Credit Karma? ›
Your FICO Score is a credit score. But if your FICO score is different from another of your credit scores, it may be that the score you're viewing was calculated using one of the other scoring models that exist.
Should I pay off my credit card in full or leave a small balance? ›
Bottom line. If you have a credit card balance, it's typically best to pay it off in full if you can. Carrying a balance can lead to expensive interest charges and growing debt.
How to get 800 credit score? ›
Making on-time payments to creditors, keeping your credit utilization low, having a long credit history, maintaining a good mix of credit types, and occasionally applying for new credit lines are the factors that can get you into the 800 credit score club.
What credit score is needed to buy a house? ›
A good credit score to buy a house is one that helps you secure the best mortgage rate and loan terms for the mortgage you're applying for. You'll typically need a credit score of 620 to finance a home purchase. However, some lenders may offer mortgage loans to borrowers with scores as low as 500.
How far off is Credit Karma? ›
They may differ by 20 to 25 points, and in some cases even more. When Credit Karma users see their credit score details, they are viewing a VantageScore, not the FICO score that the majority of lenders use.
Why does Credit Karma say my score is lower than it is? ›
This is because Credit Karma makes use of another credit scoring model compared to many lenders and possibly does not have access to all the data required to calculate your credit score. Furthermore, credit ratings from various sources can differ due to dissimilarities in the data used for their computation.
Why does my Credit Karma score differ than FICO? ›
Credit Karma uses a different scoring system than the one mortgage lenders use. There are two main scoring systems: FICO – it was created in the 1950s and is used by mortgage lenders. VantageScore – it began in 2006 and is what Credit Karma uses.
Which credit score is most accurate? ›
Simply put, there is no “more accurate” score when it comes down to receiving your score from the major credit bureaus.
