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
The Federal Trade Commission (FTC) alleged that Credit Karma tricked consumers into believing they were “pre-approved” for a credit card or had “90% odds” of approval, but in many cases, the consumers didn't qualify.
Why is Credit Karma score so wrong? ›
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.
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 is my FICO Score 100 points lower than 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.
Who is suing Credit Karma? ›
The FTC alleged that many people who got “pre-approved” credit offers from Credit Karma were not approved. As a result, they wasted time applying and sometimes saw their credit scores drop when their applications were denied.
Who owns Credit Karma now? ›
Intuit acquired Credit Karma in 2021. Credit Karma has more than 120 million members in the U.S., but Net Worth is being rolled out to initially target U.S. consumers with a credit score of 720 or above, with the goal to expand to a larger population over time.
Is FICO more accurate than Credit Karma? ›
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.
What's 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.
What is the best app to check your credit score? ›
10 Best Credit Score Monitoring Apps of 2023
- Credit Karma. Based on data acquired from your TransUnion and Equifax credit reports, Credit Karma offers free updates on your credit score. ...
- Mint. ...
- Aura. ...
- CreditWise. ...
- Credit Sesame. ...
- myFICO. ...
- IdentityForce. ...
- Experian.
Scores are calculated using different credit reports.
Some lenders report to all three major credit agencies, but others report to only one or two.
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.
How to raise your credit score 200 points in 30 days? ›
How to Raise your Credit Score by 200 Points in 30 Days?
- Be a Responsible Payer. ...
- Limit your Loan and Credit Card Applications. ...
- Lower your Credit Utilisation Rate. ...
- Raise Dispute for Inaccuracies in your Credit Report. ...
- Do not Close Old Accounts.
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.
What is the true FICO score? ›
A true FICO score ranges between 300–850 and gets calculated using only information in a consumer's credit report maintained by the three main credit bureaus— Experian™, Equifax® and TransUnion®. To receive a FICO Score, you must have a credit account at least 6 months old and activity during the past 6 months.
What credit score is needed to buy a house? ›
The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).
Can Credit Karma be trusted? ›
A: Credit Karma is a legitimate company; however, for a variety of reasons, its scores may vary greatly from the number your lender will share with you when it checks your credit. We have answers to all your questions about Credit Karma.
Why was Credit Karma sued? ›
The settlement stems from a September 2022 FTC investigation into Credit Karma's alleged use of claims that people were pre-approved and had "90% odds" of approval. The claims were made in an effort to entice people to apply for offers that in many cases they did not qualify for, the FTC said.
Is my money safe in Credit Karma? ›
When you open a Credit Karma Money Spend account, your funds will be deposited into an account at MVB Bank, Inc. and its deposit network. MVB Bank, Inc. is a member of the Federal Deposit Insurance Corp., and funds in your Spend account are FDIC-insured up to $5,000,000.
Is it safe to save money with Credit Karma? ›
Is Credit Karma Money safe? The balance in your Credit Karma Save account is eligible for FDIC insurance up to $5,000,000.
