March 16, 2021

Why Was Credit Karma Wrong About My Credit Score?

Buy a Home in San Diego California

Checking Credit Karma before applying for a loan? A rude surprise might await you.

CNBC says, “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.”

Borrowers who have run into this pitfall may not know what is going on. Did Credit Karma get their score wrong? Did the lender who pulled their credit?

Actually, both the Credit Karma score and the one the lender pulled are accurate in cases like these.

That is because the scores they pulled up are two different types of credit scores known as VantageScore and FICO score, respectively.

VantageScore: The Credit Score Credit Karma Shows You

When you look up your credit score on Credit Karma, the website reports a specific type of credit score, which is your VantageScore. This score is not the one that determines what you qualify for when you apply for a mortgage, and it is calculated differently than your FICO score.

Here is how influential different financial factors are when calculating VantageScores:

  • Payment history: extremely influential
  • Age and type of credit: highly influential
  • Percentage of credit limit used: highly influential
  • Total balances and debt: moderately influential
  • Recent credit behavior and inquiries: less influential
  • Available credit: less influential

VantageScore ranges that are possible include:

  • Excellent: 750 to 850
  • Good: 700 to 749
  • Fair: 640 to 699
  • Needs work: 300 to 639

FICO Score: The Score Mortgage Lenders Pull

When a mortgage lender checks your score to see if you are eligible for a certain type of loan or mortgage rate, they check your FICO score. Most lenders look at your FICO score to make decisions.

To calculate your FICO score, here are the weights applied to each factor:

  • Payment history: 35%
  • Amounts owed: 30%
  • Length of credit history: 15%
  • New credit: 10%
  • Credit mix: 10%

Possible FICO score ranges are:

  • Exceptional: 800+
  • Very good: 740 to 799
  • Good: 670 to 739
  • Fair: 580 to 669
  • Poor: 579 and below

Notice the differences in how the factors are calculated into both scores? You can see how your VantageScore and FICO score might not match. Often, they don’t.

That is why checking Credit Karma without understanding the VantageScore vs. FICO score can be misleading.

Why Is It Important to Check Your FICO Score?

Checking your FICO score before applying for a loan prevents:

  • Unexpected failure to qualify.
  • Higher than expected rates.
  • A hard credit check that doesn’t result in the loan offer you need.
  • Unnecessary stress and confusion.

Credit unions and banks may show you your FICO score for free, or you can buy it from any of the three major credit bureaus. Another free option is Discover Credit Scorecard.

Get Credit Score Tips Before Applying for a Mortgage

Have any more questions about Credit Karma, VantageScore, or FICO credit scores? Community Mortgage can help. Please call us today at (619) 692-3630 for credit score answers and advice, or to apply for a mortgage in San Diego.

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