Credit Karma tells everyone to get their free Credit Karma credit scores. You think that is good. Actually, it is not.
All mortgage lenders and most auto lenders require Classic FICO® scores. Credit Karma provides “Vantage” scores based on a different scoring program. All mortgage lenders (and most auto lenders) require Classic FICO Credit Scores that follow precise guidelines for loan approval, determine your interest rates and loan fees - all from the Classic FICO scores. Vantage Scores do not give the same precise numbers lenders require from the Classic FICO Scores. That is where the problem with Credit Karma starts.
Credit Karma Misinformation
Credit Karma states in its Terms and Conditions, “We provide you with free credit reports and scores from two major credit bureaus…” - from Equifax and TransUnion. They provide their own credit scores, that are often considerably different from your lender's FICO Classic credit scores.
In a survey at a university class, several students went to Credit Karma and requested their “Vantage Credit Scores” and then they requested their Lender’s Classic FICO Scores. Here are the results:
The Difference between Credit Karma and (Lenders) FICO Classic Scores
| Name |
Credit Karma |
FICO Classic Credit Scores |
Difference |
Change in $350,000 Mortgage |
| Curtis |
729 |
682 |
- 47 |
$137 Higher Mortgage Payment |
| Shannon |
698 |
720 |
+ 22 |
$137 Lower Mortgage Payment |
| Spencer |
750 |
777 |
+ 27 |
$41 Lower Mortgage Payment |
| Breylin |
739 |
703 |
- 36 |
$52 Higher Mortgage Payment |
| Jordan |
816 |
703 |
- 113 |
$149 Higher Mortgage Payment |
30 year fixed, minimum down payment.
None of these individuals had Vantage scores that were close to the Classic FICO scores. All of them would have had to pay a different amount on a mortgage.
What does Credit Karma say? They write in their Terms and Conditions:
“CREDIT KARMA EXPRESSLY DISCLAIMS ANY LIABILITY FOR ANY ERRORS OR OMISSIONS IN OUR CONTENT OR OUR SERVICES, INCLUDING THE INACCURACY OR INCOMPLETENESS OF ANY SUCH CREDIT REPORTS, (and) CREDIT SCORES.”
Really?
Your Financial Costs
If you have a 699 FICO credit score and your interest rate is lower with a 700 FICO credit score, you are not going to qualify for the lower interest rate for those with a 700 credit score. You are going to be given a higher interest rate or fees with a 699 credit score. So, if lenders require a precise credit score to secure a certain loan approval, and determine your interest rate and loan fees, what is the purpose following Credit Karma and their imprecise Vantage scores? None whatsoever.
If lender’s rates and fees require absolute precision to your credit scores (down to even a one-point difference), following Credit Karma’s imprecise Vantage credit scores will mostly cause you more confusion – and often a lot more money. This is what Credit Karma does not want you to know - there is no real value to your mortgage or auto loan to follow Credit Karma’s credit scores. It just could literally cost you thousands of dollars. Who wants that?
The solution - go to My Credit Plan and follow your lender’s actual Classic FICO credit scores. You'll be accessing your lender's FICO scores.