People on Twitter have been commiserating recently about how much higher their free Credit Karma credit scores are compared to the ones lenders actually use, as many have learned that their “excellent” credit is merely good, or worse.
Why the discrepancy?
Many people think that there’s just one credit score, but in fact there are many. The most commonly cited one is your FICO score, used in 90% of lending decisions. There is also VantageScore, which is a competitor to FICO, and similar in that both scores range from 300 to 850, with a higher number indicating greater creditworthiness.
To make things confusing, both FICO and VantageScore have different versions of the score that may or may not be used by a given lender, kind of like software updates. As an example, any one of the three national credit bureaus can be using a different FICO score for different categories of loans, like auto lending (often FICO Auto Score 8) or credit cards (often FICO Bankcard Score 8).
In addition, each of the three national consumer credit bureaus offers its own scores, which are usually provided by VantageScore. VantageScore is a legitimate credit score in its own right, but the scoring model is weighted differently than FICO, which is why it produces different scores.
Normally the discrepancy in scores is minor, but according to Investopedia, Credit Karma scores, which are sourced from VantageScore data provided by two of the major credit bureaus, TransUnion and Equifax, tend to be much higher than FICO scores—hence, the memes.
How to check your FICO credit score
All credit scores are based on your credit report, so to really stay on top of your credit score, you’ll want to check your credit report at least every year. By checking your report, you might spot errors or uncover possible identity theft (i.e., someone starting a new credit card account in your name) that are affecting your credit score.
If you’re planning to apply for a major loan or credit card in the next few months, check your FICO score beforehand. You may be able to obtain through your credit card company, or from AnnualCreditReport.com, the only official site providing free credit reports from all three credit bureaus.
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January 28, 2021 at 10:30PM
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Why Your Credit Karma Score Seems Too High - Lifehacker
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