A question that I get asked all the time is, “Why is your credit score different from the one I received from Credit Karma?” The answer has to do with the type of scoring models that are preferred within our industry.
When it comes to their credit score, most consumers immediately think of the FICO rating, the most popular rating model that the Fair Isaac Corporation has been issuing since 1989. But what you may not realize is that there are many different versions of this score, with the most recent one being FICO 8. Each lender within an industry is looking for a specific scoring model that is customized for the type of product that you’re applying for.
Auto lenders typically use a score that reflects the factors that determine the probability that borrowers would default on a car loan. Mortgage lenders use a score that was created specifically for mortgage loans or perhaps one that is unique to the lending company. When looking for a mortgage, even the score models themselves differ within the industry: Experian uses FICO Score 2, Equifax uses FICO Score 5, and TransUnion uses FICO Score 4.
Credit education websites such as Credit Karma or TrueCredit.com use a completely different scoring system from the FICO’s lenders use. In fact, only lenders have direct consumer access to FICO scores they will be using. You may be surprised to learn that although educational credit sites sell credit scores to consumers, a majority of them are never used by lenders nor do they translate to an exact FICO score.
I cannot use reports generated by those sites as for authenticity I must get them from my own credit reporting vendor using my scoring models. I cannot even use a mortgage credit report from another lender, in addition to the different scoring models they use.
That said, it is still a good idea to use those services to monitor your credit and to get a general sense of where your credit scores are headed as well as review the body of your credit report. Just know that when it comes time to apply for a mortgage, you’ll want to understand exactly what your FICO score is.