Credit Karma is a for-profit
business that uses
only two of the big three credit bureaus and your score might
not be entirely accurate. It is offering
you something for free, but it is making money elsewhere.
Second, Credit Karma
only updates its scores once per week. For most people once per week is plenty,
but if you’re planning to apply for credit in the near future, you may need a
more timely picture of where you stand.
Third, some sites have reported that the Credit Karma score is
within 1% of your FICO score. Credit Karma uses the Vantage 3.0 scoring model. Credit scores come from different scoring models, including FICO and
Vantage 3.0. More than 90% of lenders prefer the FICO scoring model,
but Credit Karma uses the Vantage 3.0 scoring model.
FICO is the most popular credit
score used by lenders and creditors and the Vantage 3.0 does not use the same
algorithm and can give the viewer a misconception that their score.
Fourth, the Vantage 3.0 score is
accurate, it’s just not the industry standard. Credit Karma works fine for the
average consumer, but the companies that will approve or deny your application
are likely looking at your FICO score.
Finally, understand that Credit Karma’s
business model is to earn commissions off loan products you purchase
through its site. Although the site positions itself as a trusted adviser, its
motivation is to sign you up for new loans. Overuse of credit can have
financially catastrophic results. Use Credit Karma to monitor your score – not
to received unbiased advice.
Millions of people
use Credit Karma to track their credit score and it is a good tool to monitor your credit score on a
regular basis. Stay proactive and
monitor your credit regularly so you can catch inaccuracies or fraudulent
information. Make sure you dispute these inaccuracies before applying for
credit. Not only does it
show you your credit scores for free, but it also gives you suggestions to
improve them.
However, if you’re gearing up to apply for a
loan or mortgage seek additional information. Track down your FICO scores and
monitor them alongside your Vantage 3.0 score. That way you’ll have the fullest
picture of your financial profile.
