Before you apply for a mortgage, you need to check your credit. But before you turn to Credit Karma to do so, here is something you need to know: the score the free tool shows you will not be representative of the score the lender will pull.
This is a matter that has led to consumers asking a lot of questions, as explained in a recent article from CNBC.
The article explains, “Consumers tweeted about going to apply for a credit card or loan thinking they have good or excellent credit, only to soon find that the credit score that the card issuer or lender pulled was lower than what they saw on Credit Karma.”This can be a rude surprise, and one that might lead to a delay before a consumer can be approved for the loan they want.
Your VantageScore is Featured on Credit Karma
You might question whether Credit Karma is providing customers with accurate scores or not. While the answer to that question is, “yes,” it is not the score that a lot of customers expect. The score that lenders pull up is usually your FICO credit score, but it is not the only one you have. You also have a number of others, including a VantageScore credit score.
That is what you see on Credit Karma.
What is the Difference Between Your FICO Score and Your VantageScore?
Your FICO score is a product of a different calculation than your VantageScore. Let’s look at how each of these two scores works.
How FICO scores are calculated:
- Payment history: 35%
- Amounts owed: 30%
- Length of credit history: 15%
- New credit: 10%
- Credit mix: 10%
FICO score ranges:
- Exceptional: 800+
- Very good: 740 to 799
- Good: 670 to 739
- Fair: 580 to 669
- Poor: 579 and below
How VantageScores are calculated:
- Payment history: extremely influential
- Age and type of credit: highly influential
- Percentage of credit limit used: highly influential
- Total balances and debt: moderately influential
- Recent credit behavior and inquiries: less influential
- Available credit: less influential
- Excellent: 750 to 850
- Good: 700 to 749
- Fair: 640 to 699
- Needs work: 300 to 639
Because there are differences in how these scores are calculated and expressed, knowing one is not the same as knowing the other.
You Need to Know Your FICO Score Before Applying for a Mortgage
Since it seems to be a common scenario for a borrower’s FICO score to be lower than their VantageScore, you should never assume that your FICO score will be equal to your VantageScore or higher.
It is okay to keep track of trends in your financial health by using Credit Karma, but the free tool will not tell you what you need to know in order to apply for a loan.
Here are some options to check your FICO score:
- Purchase your score from Experian, Equifax, or TransUnion.
- Check your score for free if that is a service your credit card provider, bank, or credit union makes available to you.
- Sign up for the free program Discover Credit Scorecard.
Let Blue Square Mortgage Help With Your Seattle Home Loan
Have additional questions about FICO or VantageScore credit scores, how to monitor them, or how to raise them? Blue Square Mortgage can assist you. To get answers to your questions or to apply today for a mortgage in Seattle, please give us a call today at (206) 352-6453.