Is Your Credit Karma Score Your “Actual Score?”

Credit Karma gives you a free copy of your credit score just for signing up, but it isn’t necessarily the same score that your future lenders will use.

You might be wondering about your Credit Karma score vs. your actual score. 

What we’re about to show is that, in fact, the score that Credit Karma gives you is often the very score that your future lenders will use.

Which Credit Score Does Credit Karma Use?

Credit Karma partners with VantageScore and gives users their VantageScore 3.0 for free. They pull your credit report from the Equifax and TransUnion credit bureaus. That way, you can see your score based on the credit history in both.

Contrary to popular belief, every consumer has a lot more than one credit score. There are many different scoring companies, and they each have multiple versions of their proprietary credit scoring models.

To top it off, lenders can apply those models to any of your credit reports from the three major credit bureaus (Experian, Equifax, and TransUnion), each of which has a slightly different credit file for you.

That creates the potential for countless versions of your credit score, but lenders focus almost exclusively on the ones that come from two primary companies: FICO and VantageScore.

In the 1990s, your FICO scores were your “real” scores because they had a near monopoly on the credit score market. Even now, (according to FICO) “90% of top lenders” use FICO scores. 

But times are changing. Many lenders use VantageScore to make loan approval decisions. The VantageScore has wide adoption, and it’s growing every year. 

According to VantageScore Solutions, more than 2,600 financial institutions use VantageScore. Their homepage states, “Nine of the 10 largest banks and 43 of the 100 largest credit unions used VantageScore credit scores in one or more lines of business.”

The Difference Between Your FICO Score and Your VantageScore Credit Scores 

VantageScore 3.0 is a commonly used score among free credit monitoring tools. But it might not be the one that your lender uses to decide on whether to approve your loan application. 

FICO and VantageScore both have different credit scores. They also have different formulas for calculating your creditworthiness, which means Credit Karma’s score might be a little different from the ones that your bank or credit card company use.

For example, your payment history refers to how consistently you pay each monthly payment on time and in full. The credit factor is worth 35% of your FICO Score 8, but 40% of your VantageScore 3.0.

The two models treat credit utilization, your total revolving debt balance divided by your total credit limit, differently as well.

It’s worth 20% of your VantageScore 3.0, where it stands as its own factor. Meanwhile, it falls under the amounts owed factor in the FICO Score 8 model, which is worth 30% in total.

As you can see, there are differences between the two models, but they’re usually not too significant. You’ll generally be in the same credit score range under both.

If you’re just checking your score periodically for generic credit monitoring purposes, Credit Karma’s VantageScore 3.0 should be close enough to your other credit scores to be satisfactory.

Limitations of the Credit Karma Credit Score

Monitoring your credit is a good practice, especially since it can notify you of any potential problems before they develop into something significant, like identity theft.

Checking your Credit Karma credit score is a great way to stay on top of the updates to your file, but it’s not perfect. Here are the most significant limitations to its service.

It Only Shows You Information From Two Credit Bureaus

Unfortunately, Credit Karma only provides your score using data from two of the three major credit bureaus: Equifax and TransUnion. If you’re planning to apply to a lender who uses Experian, you could be in for a surprise.

After all, shifting even one variable in a formula can make a significant difference. Likewise, even one change to your credit report can make a meaningful impact on your score.

While your credit reports are usually similar, there can be differences. In some cases, your credit scores can vary significantly from credit bureau to credit bureau.

It Uses VantageScore 3.0

VantageScore 3.0 is not necessarily the score that your next potential lender will use when you apply for new financing. 

That’s not a big deal if you’re just checking in on your credit periodically to monitor your progress.

However, if you’re going to be applying for a significant credit account or go interest rate shopping with a mortgage lender, you want to make sure you check the score that’s closest to what your lenders might use. 

For example, you can check both your VantageScore 3.0 credit score and your FICO Auto Score 8 from each credit bureau if you’re about to go car shopping. There’s no guarantee that your lender will use either one, but the score that they do use will probably be pretty close to at least one of those. 

According to the Wall Street Journal, new regulations will be going live soon that will require mortgage lenders to use both your VantageScore 4.0 and your FICO Score 10T in their underwriting decisions. 

For many people who don’t currently own homes, this is great news. These two new credit scoring models take into account on-time rent payments and utility bill payments that get reported to the credit bureaus. 

So if you’ve been using rent reporting services or a utility bill reporting service, a flawless bill payment history can now help improve your odds of qualifying for a home loan.

Your Credit Scores Don’t Get Updated Immediately

Another downside of checking your credit score through a third-party website like Credit Karma is that your scores don’t update in real-time. They can only show