My Lender Says My Credit Karma Score is Wrong. Is It?

CreditKarma.com is one of the most popular free credit score platforms. And who doesn’t like free? Credit Karma has more than 80 million users in the United States and Canada.

Before Credit Karma came on the scene in 2006, the only free credit scores had some expensive strings attached. You had to enter your credit card information and sign up for a free trial subscription to get access to the “free” credit score. If you didn’t cancel the trial within a few days, your credit card would be charged for the subscription until you finally did cancel.

After Credit Karma, many other websites started offering free credit scores to consumers, with no strings attached. No credit card required. No trial subscription to cancel.

Credit Karma can offer free credit scores because they make money elsewhere. Because Credit Karma has access to your credit information, they’re better able to match you with credit cards that you qualify for. If you apply for a credit card (or loan or other financial product) through their site, they’ll receive a commission.

Is Credit Karma Wrong?

As many people have found out, the free credit score you get from services like Credit Karma aren’t the credit scores lenders use when they’re checking to see if you qualify for a loan. The lender’s credit score is often lower than the credit score provided by Credit Karma, which can be disappointing when you’re hoping to get approved for a mortgage or car loan or if you’re trying to qualify for a lower rate.

Does that mean Credit Karma is wrong?

Yes and no.

You don’t have just one credit score. You actually have more than 40 credit scores.

Yes, more than 40.

There are credit scores from each of the credit bureaus and from credit scoring companies for each of your credit reports. Not all credit score are available for sale to the public.

The credit score you get from Credit Karma is the the VantageScore 3.0 credit score. With your Credit Karma subscription, you’ll get a score for both your Equifax and TransUnion credit reports. Credit Karma doesn’t currently provide a free credit score based on your Experian credit report.

VantageScore vs. FICO Score

The VantageScore is a relatively new credit score, so many people haven’t heard of it. It was developed in 2006 by the three major credit bureaus as an alternative to the well-known FICO score and is the second most common credit score used. By comparison, FICO has been around since 1956.

Most lenders check your FICO score. Depending on the lender, they may check a version of your FICO score that’s created for that industry. Auto lenders, for example, view your FICO Auto Score which is used to predict whether you’ll repay an auto loan. You can purchase your FICO score by visiting myFICO.com. This will give you a credit score that’s more likely to match what the credit score your lender sees.

Why Credit Karma is Useful

Since you have to pay for a FICO score – or pay for a subscription – monitoring your FICO score regularly over a long period of time can get expensive. Free credit scores, like the one from Credit Karma, can be useful for keeping up with daily or weekly changes to your credit score.

Free credit scores aren’t all that Credit Karma offers – so even if the score doesn’t match what lenders see, it’s worth keeping.

First, you can use Credit Karma to get a general idea of your credit health, whether you have good or bad credit or whether your credit score is improving or declining. It’s free so it beats buying a FICO score every time you want to check your credit score.

Credit Karma also offers free credit monitoring a benefit that help you protect your credit from identity theft. If you spot anything out of the ordinary with your credit, you can follow up quickly to prevent additional accounts from being opened in your name.

You can use Credit Karma to keep up with your credit score on a regular basis. But if you’re planning to apply for a major loan, it’s worth checking your FICO score to have a better idea of what your lender will see. Even then, because there are so many versions of credit scores, there’s no guarantee that the credit score you order over the internet will perfectly match the credit score your lender sees.

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