Why Your Pulled Credit Score Isn’t the Same as Credit Karma
Written by: Jason Sheaffer of Prosperity Home Mortgage, LLC
We’ve all seen the commercials proclaiming you need to know your credit score before you make a major purchase. How do you know the score you are receiving is actually the right credit score? I speak with buyers all the time that tell me they checked their credit and are disappointed to find the score I pull is sometimes 50 to 75 points lower than they saw on some website they visited earlier that day. Why would that be? Shouldn’t all the information be the same?
Credit Scores are Industry Specific
A typical consumer actually has 53 different credit scores! Mortgage lenders obtain different scores than car dealers or credit card companies or Credit Karma. The reason is that each industry skews the credit score to be more heavily weighted in the area that matters most to them. For example, a car dealer wants their credit score to be more weighted toward a consumer’s payment history on prior car loans. While a consumer’s payment history on credit cards or a mortgage are also important to the car dealer, the fact of the matter is if a car buyer shows a history of paying all their bills on time but has late payments on prior car loans, the car dealer assumes the consumer is a higher risk for a new car loan. Meanwhile that same buyer could apply for a credit card and find that their score is higher according to the credit card company than the car dealer told them because their payment history on credit cards was flawless.
The Scales Vary
Another reason for differing credit scores is the actual scale that is being used. Most lenders use a credit score range of 300 to 850 with 300 being the lowest score and 850 being the highest. Many of the consumer websites use different scales such as 200 to 900 or 500 to 999. Obviously a 750 credit score on the 500 to 999 scale is not the same as a 750 credit score on the 300 to 850 scale. Knowing the scale that is being used plays a big role in your score.
Consulting an Expert is Key
With all of this conflicting information, how do you know what’s accurate and what’s not? Consulting an expert is the key. While websites like Credit Karma give relatively accurate information about the accounts on your credit report, they are still a for profit business that want you to click on the links that appear on their website so they can sell more ad space to credit card companies. In order to get the most reliable information, it’s best to obtain your credit score from reliable sources such as the 3 main credit bureaus (Equifax, Transunion and Experian). This will give you information that is the closest to what lenders actually use when deciding whether to approve you for a loan.
Jason Sheaffer
NMLSR ID 195134
Mortgage Consultant
Office: (301) 644-1043
Cell: (301) 448-0426
Fax: (844) 398-2391
Email: jason@phmloans.com
Website: jasonsheaffer.phmloans.com
Posted in Buyers