Credit Karma vs FICO Score

Free FAKO credit score vs FICO
One of the negative points thrown at websites like Credit Karma is that the free credit score they give is not your FICO score. Credit Karma offers three different types of credit scores, all supplied by the credit reporting agency TransUnion. They offer the TransRisk New Account Score, VantageScore, and Auto Insurance Score. What these all have in common is that they are not FICO scores, but blended scores that are often referred to as FAKO or educational scores. The question that many consumers have is whether or not it’s important that the score you get from Credit Karma isn’t your true FICO score?

Some people who have a problem with FAKO scores point to a number of reasons why they feel a FAKO score is inferior to your FICO score. One of the main reasons is that when a lender pulls your credit score, they are going to be looking at your FICO score, and not one of the scores that you would get from Credit Karma. On the surface, this makes sense, but the reality is that there probably isn’t a whole lot of difference. That’s because you don’t have a single FICO score. Different lenders will be pulling scores that are weighted to take into account the risk factors that matter most to them. For example, the score the car dealership gets for you from FICO will be different than the home loan officer. In other words, the score they get will most likely not be the same number that you receive from FICO.

Another complaint that’s often made is that a FAKO score isn’t as reliable as a FICO score, and this may mislead those who are getting them. It’s certainly true that anyone who gets a free credit score from Credit Karma needs to realize that the score is not their true FICO score, but that doesn’t necessarily mean that the score is unreliable.

A lot depends on how the consumer is actually going to use the credit score. There’s an implied assumption that those who are seeking out their credit score are only doing it because they soon plan to take out a loan. This certainly could be the reason that they want to know their credit score, but there are also a lot of other legitimate reasons that people are interested in what their credit score is. It’s how the consumer wants to use the credit score that determines which of the two is a better choice.

If you aren’t going to be getting a loan right away, getting a free credit score from Credit Karma has the huge advantage in that you can track how your score changes over time. This can give you a better understanding of what affects your score and how it can change, depending on how you handle your finances. By being able to see your score on a monthly basis, it gives you a wonderful opportunity to improve your score. You can also get free credit monitoring so if something is put into your credit report that doesn’t belong there, you can catch it right away, so that your score remains high, rather than get a huge surprise if you are planning to take out a loan.

Another huge advantage that Credit Karma has over getting your FICO score is that it’s free. If you want to find out your FICO score from MyFICO, it’ll cost you $14.95 (although you should be able to find online discount codes which will allow you to get it for less than this). So if your main purpose for wanting a credit score is to see where it is and try to improve it for the future, Credit Karma (or other sites that give free FAKO credit scores like Credit Sesame or Quizzle) should fit the bill perfectly and make for a better option that your FICO score.

If, on the other hand, you need an accurate score because you will be applying for a loan, I would probably opt for your MyFico score. As mentioned above, it’s probably not going to be exactly the same as the lender will get, but it’s the basis of that number so it shouldn’t be too far off of it. With Credit Karma (or any or the other sites), you simply don’t know how far off it will be, and in some cases a 10+ point swing can mean a different interest rate.

It’s also important to note that there is a risk to using third-party services for your credit score like Credit Karma. They recently were forced to settle with the Federal Trade Commission (FTC) do to lax security on their mobile phone app which left their customer’s sensitive financial information vulnerable to hackers. There is always an added risk of having sensitive financial information stolen when you give it to third-party sites like Credit Karma.

There is also a third option. A number of credit cards like Discover have started to give customers their FICO credit score on their monthly statements. If you aren’t credit card adverse and you have the discipline to always pay off your credit card balance each month, this can be a great alternative to the two.

(Photo courtesy of Sean MacEntee)

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16 Responses to Credit Karma vs FICO Score

  1. dave says:

    I opted for the Discover card option and have absolutely no regrets. I don’t have to go to another site to give information and my latest credit score comes in the mail each month. Very convenient and I’m so happy they started doing that.

  2. Taylor says:

    Thanks for this! I didn’t know about FAKO – that term makes me laugh LOL. I just cancelled myFICO monitoring because of the expense. I plan on going to Credit Karma and it seems like it’ll be sufficient for my needs. I’m not looking to take out a loan just working on building my score. The one free report a year should be enough for me to get my “true” score when I need it.

  3. Will says: is also another free monitoring site that provides Experian information. I like Credit Karma because of the tools and all the stats they give on credit card offers, but the score is off by a lot most of the time compared to my actual FICO.

  4. Gen Vel says:

    Twice I have looked at my “free” credit score with Credit Karma and then purchased my actual score from the companies and both times they were 30-50 points off!!! So, be advised, it is not very accurate! But it is a great starting point……..

  5. gina says:

    I like to use the services to keep an eye on any unexpected fluctuations in my credit score. There was a time that I needed to know them because my credit wasn’t so good, but it has improved greatly over the years that is no longer an issue. Still, it’s nice to know what the credit score is, and if it is changing from month-to-month. If it is, then I can train figure out what is causing the fluctuation. It’s a free service, so why not?

  6. alice says:

    Dave Ramsey says that you don’t need a credit score. If you are worried about a credit score, what you are really worried about is your debt score. You shouldn’t have any debt at all so you don’t need a credit score. If you are trying to get your credit score up, you’re doing it all wrong.

  7. greg says:

    I concur. My score has been off by quite a bit too. As the articles implies, it’s good for tracking long term, but not if you need an accurate assessment of your FICO score.

  8. Jordan says:

    I recently purchased a house. Prior to applying for a mortgage, I got my free credit score from another free credit website. Like Credit Karma, it used credit data from TransUnion, but the score model is proprietary. My score was 3 points lower than my mortgage FICO score from TU, so these scores can be accurate.

  9. JT says:

    Use these free credit score websites and you’ll get a fairly good idea of your FICO. Credit Karma (derived from Trans Union), (derived from Experian), Credit Sesame (derived from Experian), Quizzle (derived from Equifax).

    The mortgage lender I’m using does not use FICO. Instead, it goes through a credit verification company to get 3 separate scores from the bureaurs, then take an average. There are under writing guidelines regarding credit score.

  10. Stacey says:

    That sum refers to the VANTAGE SCORE you can obtain through CREDIT KARMA which blends the 3 major credit bureaus of TRANS UNION, EQUIFAX and EXPERIAN.

  11. Spanky says:

    Stacey – in my experience, mortgage lenders are NOT using the VANTAGE score as seen on Credit Karma (I used to make software for mortgage underwriting).

    The standard scoring model for mortgage underwriting (at least as of a year ago) is FICO ’04, which comes in different flavors, depending on the credit reporting agency — Beacon 5.0 (Equifax), FICO-II (Experian), FICO Classic 04 (TransUnion).

  12. Bethie says:

    So, if you follow this philosophy, why are you reading and commenting on articles concerning the very practices you “don’t need”.

  13. anon says:

    Discover card is the best. You get monthly fico score update.

  14. Katy says:

    Well you gotta be able to buy a house and most American’s can’t do that without credit. Not everyone can buy a house cash. Which means you have to have some debt in order to qualify for a house. Once you get that credit established and have your down payment then you can work the debt snow ball. Better than throwing our money away on rent. Dave is really good at teaching debt management and getting out of debt and offers many tools but those tools work best with an income of over $200,000 per year. Not everyone has that. So you have to do what you have to do for your family.

  15. Me says:

    Your free annual credit report does not include your score.

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