Is Credit Karma Accurate for Buying a House?

You may want to buy a house and you wonder whether Credit Karma is accurate for buying a house. You are able to read the information about it below together with some other information about Credit Karma.

The Accuracy of Credit Karma for Buying a House

The information whether Credit Karma is accurate for buying a house or not varies. According to the UpNest site, if you want to buy a home soon, you can use Credit Karma to be able to see your credit score for free. If you want to buy a home in the future, Credit Karma can also be used to keep track of your credit score over time and make sure that it is improving. When it can reach over 740, you are able to apply for a mortgage knowing that you will get the best terms of the lender.

Is Credit Karma Accurate for Buying a House

On the UpNest site, it is also explained that Credit Karma accuracy also has a meaning that you are able to check your credit report for any inaccurate information that may be bringing down your score. The financial advice is one of the Credit Karma’s best features. With this feature, you will be given suggestions on ways to raise your credit score such as having more available credit. Let’s say that you follow their advice. If so, your credit score will improve and it will be able to help you to be eligible for a better loan.

Here are some pros and cons about Credit Karma according to the UpNest site.

Pros

    • Credit Karma is a free service.
    • Your credit report and credit score can be kept track of by you on an ongoing basis.
    • It will give you an explanation about how your credit score works.
    • It will give you suggestions for improving your credit score where it is crucial to qualifying for a prime loan.
    • Their data is very secure and encrypted. It means that your data is secure and never sold to any third parties.

Cons

    • The information is arranged weekly. So, the information may not be very up-to-date.
    • It is not the industry standard. So, the score of your FICO may be a little bit different.
    • Credit Karma only works with 2 out of the 3 credit reporting bureaus.

Paul Gobat on Quora in a thread about the accuracy of Credit Karma when buying a house, explained that Credit Karma is not good enough to rely on. He suggested that you have to connect to a service that provides the proper FICO score. However, Randy Henderson on Quora, said that even though Credit Karma uses Vantage scores which is not what lenders use, it is still a good indicator of your financial health. Furthermore, he said that a 580 score on Credit Karma still means you are going to have a poor credit score, regardless of the method which is used.

On Quora, Shiva Bhaskar said that Credit Karma is generally not very useful as an indicator of your credit score when buying a home. It is because mortgage lenders use versions of the FICO scoring model, not the vantage credit score which is offered by Credit Karma. He also said that if you have no late payments, and low credit card debts, your Credit Karma score should be fairly high, and your mortgage score should be good as well. However, in case you have any negative items, or high debts, your FICO mortgage score and Credit Karma score are able to vary widely. Furthermore, he said that if you are newer to credit, there is also often a large gap between these scores. If you are in one of these situations, he said that you may want to buy your mortgage FICO scores from the myFico website. Also, you could have a mortgage lender run your credit and tell you where you are, even though it will impact your score.

About The Minimum Credit Score That You Need by Mortgage Loan Type

According to the Credit Karma site, here is the explanation about the minimum credit score you need by mortgage loan type. Before the average credit score is discussed for recent homebuyers, you may want to know about the minimum credit score for a mortgage in 2020. The answer depends on the type of mortgage.

You are able to see a breakdown of the minimum FICO scores usually required, based on the type of mortgage loan – Federal Housing Administration loans (FHA loan), U.S. Department of Veterans Affair loans or conventional loans through a private lender that are insured through Freddie Mac or Fannie Mae.

    • Type of mortgage loan: Conventional mortgage loan
      Minimum FICO score required: 620
    • Type of mortgage loan: FHA loan
      Minimum FICO score required: 580
    • Type of mortgage loan: VA loan
      Minimum FICO score required: there is no minimum credit score even though most lenders require a minimum score of 620.

It is important for you to know that the minimum score listed above are for FICO credit scores, particularly – this is the scoring model mortgage lenders usually turn to when they consider applications.

Is Credit Karma Accurate?

You may want to know whether Credit Karma is accurate or not. It is understandable you wonder about it because it is a free service. According to the Stilt site, the credit score and report information on Credit Karma is accurate. It is because Credit Karma uses two of the three credit agencies to report it. Those are Equifax and TransUnion. These agencies give the reports and scores.

VantageScores is also offered by Credit Karma. However, it is important for you to note that they are separate from the other two credit bureaus. So, you are able to be calm that the scores are accurate as you expected from this free service.

Even though most scores are accurate, there are situations when they are not perfect. Sometimes, the score may be off. So, besides Credit Karma, it is better for you to have a credit report done by your finance or a credit agency. You have to make sure that you have the correct credit score if you want to get a loan, get a new house or buy a car.

Credit Karma is not a credit bureau so that the information that they have is not from creditors. However, it gives you the information about your credit report and score based on the report of two credit bureaus.

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