Credit Karma is a finance company which was founded in 2007. This company is known as a free credit and financial management platform. Now, you may wonder about points which are Credit Karma off. Here, you can read the explanation about it together with some other information related to Credit Karma.
The Amount of Points Credit Karma Off
According to the Lendedu site, Credit Karma may be off by 20 to 25 points about its accuracy. On the Lendedu site, the author also compares Nate’s Credit Scores on Credit Karma vs Wells Fargo and here is the explanation about it according to that site.
On the Lendedu site, the writer said that they did an experiment to see how accurate Credit Karma’s scores were for Nate Matherson. It shows from Nate’s Credit Karma account that the Transunion is 770 and it is excellent and the Equifax is 775 and it is excellent. Also, on July 9th, 2019, Nate applied for a personal line of credit from Wells Fargo. Nate’s Experian FICO Score 9 was 25 points higher than his VantageScore from Transunion and 20 points higher than his VantageScore from Equifax.
Furthermore, it is also explained that in Nate’s case, Credit Karma was accurate enough to say that he had an excellent credit score, but it was not perfect.
The Accuracy of Credit Karma Score
According to Investopedia, their team reached out to Credit Karma to ask why people need to trust Credit Karma to provide them with a score that is an accurate representation of their creditworthiness. Then, Bethy Hardeman who is the former chief consumer advocate at Credit Karma said that the scores and credit report information on Credit Karma comes from TransUnion and Equifax, two of the three major credit bureaus. Furthermore, he said, “We provide VantageScore credit scores independently from both credit bureaus. Credit Karma chose VantageScore because it’s a collaboration among all three major credit bureaus and is a transparent scoring model, which can help consumers better understand changes to their credit score.”
On Investopedia, it is explained that Credit Karma is not a credit bureau. It means that they do not gather information from creditors. It is also explained that the credit scores and also reports that you see on Credit Karma reflect your credit information as reported by TransUnion and Equifax, two of the major consumer credit bureaus and the scores are not estimates of your credit rating which makes them accurate and reliable.
According to the Investopedia site, here is the explanation about VantageScore. It is explained that the FICO score is arguably the best-known credit score. Nevertheless, there are a lot of people who are not aware that FICO does not actually gather information. FICO is a model which is used to make a score by looking at your files from the three major credit reporting bureaus.
A lot of the same processes are followed by VantageScore, except that its scoring model was actually created by the credit bureaus. Even though VantageScore is less known to the public, scoring 30 million more people than any other model is claimed by it.
One advantage is that it scores people with little credit history or known as having a ‘thin’ credit file. Let’s say that you are young or you have recently come to live in the U.S. If so, it could be a factor which is important.
FICO vs. VantageScore
According to Investopedia, here is the explanation about FICO vs. VantageScore. On that site, it is explained that VantageScore and FICO are software programs that count credit ratings based on consumers’ spending and payment history. FICO is the older and better-known model. It was introduced in 1989. In 2006, VantageScore was released and it was developed by the three leading consumer credit agencies namely Experian, Equifax, and TransUnion.
They are different models so that your VantageScore will be a little different from your FICO score. In that case, you may get a different FICO score from various sources at any given time, depending on whether the source utilizes a particular variety of FICO or the most often used base model and which version is used.
The point is that your score must be in the similar range on any or all of those models. Make sure that you do not have a ‘good’ VantageScore and only a ‘fair’ FICO score.
The Reasons Why Your Credit Scores from Credit Karma Different from Scores You Got Somewhere Else
According to the Credit Karma site, here are the reasons why your credit scores from Credit Karma are different from scores that you got somewhere else.
- There is a mistake.
It is not unheard-of about errors on credit reports. Let’s say that one bureau has your information completely correct. If so, even there is no certainty that the other two bureaus will as well. To offer some helpful context, through Credit Karma Direct Dispute tool, there are more than $10.2 billion in wrong debt which has been deleted from TransUnion credit reports since 2015 and it is only one credit bureau.
- Not all lenders make reports to all three major credit bureaus.
There are some lenders who may only make report to one or two bureaus, not all three. Besides, your reports may not be updated by the bureaus at the same time. Different information is able to understandably result in different credit reports and credit scores.
- If the credit-scoring models are different, it can yield different results.
Lastly, credit scores are counted using different scoring models. Since every scoring model is able to emphasize different aspects of your credit history, you are able to get different scores even if they are based on similar credit reports.
- There is a mistake.
What To Do If I See Wrong Information on Credit Karma
According to the Credit Karma site, here are the things that you should do if you see wrong information on Credit Karma.
- Your creditors may have not reported up-to-date information to the bureaus. Creditors generally report your updated account data to the credit bureaus once a month. So, it is common to see old balances, payment activity and credit utilization rates. If this case happens, you just have to wait until the information is updated.
- There is information which is inaccurate or outdated on the credit report. If the wrong information is more than a month old, it can mean that your credit report has inaccurate or outdated information about your credit history. If so, you can view the full credit report in question, review it carefully, and dispute any errors you see directly with the credit bureau.
- TransUnion and Equifax may be slow in updating your reports. On Credit Karma, you are permitted to see when your reports were last updated. Also, you are able to see when the next update will be done.
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