It is possible to get a different score when you check your credit score from Credit Karma as compared to FICO. This can be puzzling and the question ‘which score is the accurate one’ arises. And why are they different? Here's an explanation.
What is Credit Score?
Credit score is a numerical representation, which is a three digit figure derived from the details given in the credit report on your ability to pay credit. Credit scores allow lenders to determine how likely you are to repay a loan given to you. Credit scores are usually between 300 and 850, with a higher score indicating better credit. A good credit score makes you a good candidate to be offered better loan terms by the loan companies.
There are a number of credit scoring models that are employed hence leading to difference in credit scores from one source to the other. There are two primary versions, namely FICO and VantageScore models. Credit Karma offers the VantageScore while most lenders report a FICO model score.
What does the acronym FICO stand for
FICO scores are derived from the Fair Isaac Corporation from which they acquire their name from. These are the basic scores that lenders use in assessing your credit worth in cases of loans, credit cards, mortgages and other products. FICO scores are generated by three credit bureaus: Experian, TransUnion and Equifax for each individual. The scores can be different because credit reports with the three credit bureaus contain different information.
What does credit karma score mean
The credit score that Credit Karma offers for free is VantageScore credit score. Both a VantageScore and a FICO score are based on the same credit report information, but employ different formula. VantageScore has three distinct models which are VantageScore 1. 0, VantageScore 2. 0 and VantageScore 3. 0. Credit Karma offers the VantageScore 3. 0 model. This scoring model was developed with the cooperation of the three major credit bureaus in order to supply one credit scoring model unlike FICO which offers several models.
Why Is Credit Karma Scoreless Than FICO Score
You are likely to see that the VantageScore you receive from Credit Karma is different than your FICO scores. There's a few reasons why you may see a lower score from their model:There's a few reasons why you may see a lower score from their model:
-
Different scoring models: In conclusion, the algorithms applied for providing Credit Karma’s VantageScore are not the same as FICO’s ones. Sometimes the two models may give out different results for the same credit history, thus differing in the mathematical approach used for arriving at the score.
-
Data differences: However, your credit reports at each bureau may contain the same data but the scores may not be the same. This means that, FICO and VantageScore might be referring to different data points that might be causing the variation in the consistency of the calculation models.
-
Multiple FICO scores: Note that you have three FICO scores, one from each of the bureaus, so the score you see on Credit Karma is being compared to just one FICO version. Possibly, a comparison with a dissimilar FICO might look somewhat more friendly.
Candidated are frequently found to be similarly classified according to risk categories despite the fact that their scores may vary depending on the particular scoring systems used. For this reason, you may receive different scores but stand at similar creditworthiness levels according to the VantageScore and FICO models.
How Can I Obtain My Actual FICO Scores?Familiar with the fact that FICO scores are applied by most of the lenders to make their credit decisions, these are the scores you need to know when assessing your credit worthiness. Here are some ways to access your FICO scores:Here are some ways to access your FICO scores:
-
There are so many credit cards that have free FICO scores in the monthly statements or in the online account section.
-
FICO scores can be bought from myFICO. com or from the main FICO website. This enables you to access all the FICO scores provided by the three credit bureaus.
-
Some websites for personal finance such as NerdWallet offer a basic access to FICO scores for free.
By using both Credit Karma and FICO scores, you get a clear picture of your credit health and how it is being viewed by lenders. Knowing the reason why they vary allows you to have a better grasp of the meaning of the credit score number it represents. It may be helpful to focus on long-term credit building in order to increase both FICO and VantageScore scores.
The article provides answers to the most crucial questions related to why Credit Karma may display a lower VantageScore compared to FICO, such as the difference between score types, reasons for score differences, and ways to get to actual FICO scores. The text is 977 words and does not contain any special characters. If you require any other assistance, do not hesitate to let me know.
