Why are “Credit Karma scores” so different than the scores you pull as a lender? Credit Karma uses Vantage scores and Lenders use FICO scores. Bottom line, they calculate the scores differently. Major Differences are Late payments over 2 years (not scored in Vantage), Medical collections (not scored in vantage), Collections under $100 (not scored in vantage ) Debt utilization is about 50% of the vantage credit score it is about 30% of the FICO credit score.
Credit Karma is mainly used by credit card companies, it gives you a free credit score and credit report in exchange for information about your spending habits. It then charges companies to serve you targeted advertisements. The scores and credit report information on Credit Karma come from TransUnion and Equifax, two of the three major credit bureaus. Credit Karma compiles its own accurate Vantage Score based on that information.
Differences between the two scoring models:
Relief in Sight - The good news is there is legislation passed for 2023 that will bring some consumer relief and actually make the FICO Score look fore like the Vantage by removing small medical collections.
Most important, regardless of which scoring model you are obtaining, remember these 4 key component's that make a perfect credit score:
1. Never miss a payment
2. Keep your Credit Utilization Rate Low
3. Don't Apply for Credit too often
4. Review your Credit Reports, regularly