FICO is a model used to create a score by looking at your files from the three major credit reporting bureaus. Credit Karma's VantageScore follows much the same process, except that its scoring model was actually created by the credit bureaus.
Your score can then differ based on what bureau your credit report is pulled from since they don't all receive the same information about your credit accounts. Secondly, different credit score models (and versions) exist across the board. As it states on its website, Credit Karma uses the VantageScore® 3.0 model.
Which credit scores does Credit Karma offer? The model used for credit scores on Credit Karma is VantageScore® 3.0. While VantageScore® credit scores aren't used as widely as FICO® scores for credit decisions, they can still give you a good idea of where your credit stands.
But, despite that, you'd be surprised how many borrowers are shocked that their Credit Karma score is lower than the FICO scores their lender uses. Read on to find out why. And most importantly, what you need to know about credit scores when applying for a mortgage.
For over 25 years, FICO Scores have been the industry standard for determining a person's credit risk. Today, more than 90% of top lenders use FICO Scores to make faster, fairer, and more accurate lending decisions. Other credit scores can be very different from FICO Scores—sometimes by as much as 100 points!
Credit Karma touts that it will always be free to the consumers who use its website or mobile app. But how accurate is Credit Karma? In some cases, as seen in an example below, Credit Karma may be off by 20 to 25 points.
You can get your FICO® Score for free from hundreds of financial services companies, including banks, credit unions, credit card issuers and credit counselors that participate in the FICO® Score Open Access program and offer free scores to customers.
If your bank is on board, you can generally check your FICO Score by logging onto your online banking portal. Click here for a list of lenders participating in the FICO® Score Open Access program. Credit card companies – If you carry the right kind of plastic, you may be able to get your FICO Score for free.
The most accurate credit scores are the latest versions of the FICO Score and VantageScore credit-scoring models: FICO Score 8 and VantageScore 3.0. It is important to check a reputable, accurate credit score because there are more than 1,000 different types of credit scores floating around.
Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.
Some lenders report to all three major credit bureaus, but others report to only one or two. Because of this difference in reporting, each of the three credit bureaus may have slightly different credit report information for you and you may see different scores as a result.
Credit Karma Accuracy
The credit scores and reports you see on Credit Karma come directly from TransUnion and Equifax, two of the three major consumer credit bureaus. The credit scores and reports you see on Credit Karma should accurately reflect your credit information as reported by those credit bureaus.
Credit Score Range
FICO Scores range from 300 to 850. At first, VantageScore credit scores featured a different numerical scale (501 to 990). However, VantageScore 3.0 and 4.0 adopted the same 300 to 850 scale that FICO uses. With both FICO and VantageScore models, higher scores are better.
As many people discovered, Credit Karma does not use the same scoring system as major lenders. It's not so much that Credit Karma's score is wrong, it's just that they use a different measurement system.
Consequently, when lenders check your FICO credit score, whether based on credit report data from Equifax, Experian, or TransUnion, they will likely use the FICO 8 scoring model. FICO 8 scores range between 300 and 850. A FICO score of at least 700 is considered a good score.
The most commonly used FICO Score in the mortgage-lending industry is the FICO Score 5. According to FICO, the majority of lenders pull credit histories from all three credit reporting agencies as they evaluate mortgage applications. Mortgage lenders may also use FICO Score 2 or FICO Score 4 in their decisions as well.
When the scores are significantly different across bureaus, it is likely the underlying data in the credit bureaus is different and thus driving that observed score difference.
Our Verdict: Credit Karma has better credit monitoring and more features, but Experian actually gives you your “real” credit score. Plus it offers the wonderful Experian Boost tool. Since they're both free, it's worth it to get both of them.
For the majority of general lending decisions, such as personal loans and credit cards, lenders use your FICO Score. Your FICO Score is calculated by the data analytics company Fair Isaac Corporation, and it's based on data from your credit reports. VantageScore, another scoring model, is a well-known alternative.
The Score Ranges
The base FICO® Scores range from 300 to 850, while FICO's industry-specific scores range from 250 to 900. The first two versions of the VantageScore ranged from 501 to 990, but the latest VantageScore 3.0 and 4.0 use the same 300-to-850 range as base FICO® scores.
FICO Score Conversion. There is no official method of converting a VantageScore to a FICO score. Because each scoring uses different criteria and methods of pulling data, it's nearly impossible to convert. However, keeping both scores in mind can give you a much more well-rounded understanding of your credit health.
If you've had late payments on your credit cards, they will have about the same impact on both your FICO and your VantageScore. But if you've had late payments on your mortgage, you might find you have a higher FICO score than VantageScore.
As mentioned above, a 680 credit score is high enough to qualify for most major home loan programs.
A FICO Score between 740 and 850 is generally considered to be in the very good to excellent credit score range to buy a home. If your score falls below this level, however, you may still be eligible for some mortgage opportunities in the financial marketplace.
FICO Score 9 (also known as FICO 9 and FICO 9.0) is the latest edition of the widely regarded credit scoring models. It means good things for your credit score, although it is rolling out very slowly.