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Why Your Credit Karma Scores Might Be Higher Than Your FICO Scores

April 22, 2022

Woman Looking Up FICO vs Credit Score On Computer Graphic

You’ve probably heard of Credit Karma – even the name sounds nice, doesn’t it? 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.

Credit Karma Scores That Are Too High 

In any given week, we have borrowers contact us who are very proud of their Credit Karma score. We call them the overly confident borrower. They’re sure that they’ll be able to get the best rate based on their score. But when we pull their credit, their score is much lower. They were devastated.

Karma Credit Scores That are Too Low 

On the flip side, we’ve had borrowers who were sheepish about their low Credit Karma score. We call them the shy borrower. They asked if there was any way they could qualify for a mortgage. We pull their credit and find it’s much higher than they thought. They were elated.

Credit Karma vs. Actual Score 

What’s with the discrepancies? The answer is easy. Credit Karma uses a different scoring system than the one mortgage lenders use. There are two main scoring systems:

  1. FICO – it was created in the 1950s and is used by mortgage lenders
  2. VantageScore – it began in 2006 and is what Credit Karma uses

Although FICO and VantageScore use the same data, they process it differently. That’s why the scores can be so far apart.

It’s similar to how the UK, Europe, and the USA measure shoe sizes. All measure the same foot, but they come out with different numbers. For example, a women’s size 6 in the US would be a 4 in the UK and a 37 in Europe. Same feet – different numbers.

How many credit scores do you have?

Many borrowers think they only have three credit scores – one for each bureau (Equifax, Experian, TransUnion). But even though the consumer information comes from the three main bureaus, different scoring algorithms are used to develop the score. That’s why there are hundreds if not thousands of credit scores. Some are industry-specific, like in the auto industry.

Add to the confusion that scoring models are updated all the time. The moral of this story is if you’re getting a mortgage – don’t think your Credit Karma score is accurate.

What Consumers Have to Say

If you want to know what people really think – check social media. Some people have been pretty vocal regarding Credit Karma. Here are a few Tweets from Twitter:

“Credit Karma always says my credit score is like 750. But then we just refinanced, and the bank sent out the credit disclosure letter and said my score was 825.”

Credit Karma is wrong 99% of the time. They can be anywhere from 100 points higher to like 80 less than the actual score.”

“If you think your credit score on Credit Karma is right, you wrong, lol.” 

And for the last one – a bit more colorful!

“Credit Karma: “your credit score is 800.”

“Car dealerships: “ma’am. your shit is 325.”

Who should you trust?

Credit Karma vs FICO

When you’re going to get a mortgage, have your credit pulled by the lender you’re going to use. They’ll get all three of your scores and take the middle one. If your score is too low, a good lender will tell you how to raise it. Knowing your score and whether you have good credit or great credit is important. That’s because your ability to get a mortgage and what type of interest you’ll be paying is connected to your score.

What is Credit Karma Good For?

If you want a free service to just “monitor” your credit, it works. You’d be able to see if there’s a new account that’s open or something fraudulent. It can keep you aware of what’s happening in your credit file. The key thing is to not rely on their scoring

Final Comments

Sometimes it’s great to get a pat on the back – even if you don’t deserve it. But when it comes to your credit score – it’s best to know the plain truth and deal with it. At Homestead Financial Mortgage, we’re straight shooters. We’ll pull your credit, let you know your scores, and work hard to get you a loan.

Homestead Financial Mortgage is a top mortgage lender. Our low-interest home loans are some of the best in the states we serve. We service Arkansas, Colorado, Florida, Illinois, Indiana, Kansas, Missouri, Ohio, Tennessee, and Texas. Contact us today to learn more about the home loan products we offer that are right for you.

"By being open and recognizing our strengths and weaknesses, we can see opportunities for growth and ways to help each other."

- Jayson Hardie on Growth

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