Credit Scores from Credit Karma are Deflated

I recently refinanced my mortgage, which provided me with my real credit scores from all three repositories: TransUnion, Equifax and Experian. For a while I’ve wanted to try out Credit Karma’s free credit reporting service. This is a perfect opportunity to compare Credit Karma’s score with my real credit score.

How it Works

Credit Karma provides free credit scores because they believe the credit score is necessary to maintain and improve your financial health, so they give it out for free. The site is secured through VeriSign and Hackersafe. Your social security number is the only critical piece of information that is needed to access your credit score, and it’s only request once.

Sign-Up

Follow this LINK. Click on the “Get Your Free Credit Score” button.

Enter the following information:

Check your email to confirm your email address.

Enter some more information:

Credit Scores

Credit Karma provides a graph that allows for easy tracking of your credit score.

Unfortunately, I just started using Credit Karma, so I only have one data point. Interestingly enough, Credit Karma gave me a credit score of 718. When I refinanced my mortgage, I was provided with the following actual credit scores: 751 (TransUnion), 751 (Equifax) and 746 (Experian). Clearly, Credit Karma’s reported credit score is a tad below the actual score.

Credit Snapshot

Credit Karma provides more than just your credit score. They provide you with information regarding how your credit score compares with others. Credit Karma provides the following charts.

A quick distribution shows that I fall into the largest category with 17% of the nation. Compared to US consumers I fall in the 68th percentile. Apparently, my credit score in the eyes of a lender ranks between fair and good, yet my mortgage broker says I’m in the highest bracket, which qualified me for the lowest rate on my mortgage. All of the FICO scores that I’ve received in the past year all provide me with higher credit scores, percentiles and lender rankings. Again, Credit Karma appears to be a bit low with regards to statistical analysis rankings.

Credit Compare

I don’t know how useful the following information is, but Credit Karma provides you with credit score comparisons with the Credit Karma community, your state, age and email domain. I find this information to be very useless when compared to information about the total US consumer base.

Credit Simulator

The most interesting aspect of Credit Karma is the credit simulator. The following categories can be modified and you will receive a simulated credit score.

• New credit cards
• New loans
• Credit inquiries
• Increased credit lines
• Close your oldest credit card
• Balance transfers from another credit card
• Increase or decrease your credit card balances
• Pay off all credit card balances
• Allow monthly accounts to become overdue
• Make your payments on-time
• Public records (liens, foreclosure, etc.)
• Go to collections
• Declare bankruptcy

Final Thoughts

Credit Karma appears to provide slightly lower credit scores. A more accurate credit score might be obtained if you take the Credit Karma score and add 20-30 points. I do really like the graphing/monitoring capabilities and the credit simulator. Overall, Credit Karma seems to be a safe way to monitor your credit score. It’s definitely better than not knowing your credit score.

Does anyone else use Credit Karma? And if so, is your credit score low?

Random Thought

USA! USA! Nothing like a good dog pile in March. What a come from behind victory. At this point, it doesn’t matter to me if the USA wins, I’m just proud of the effort they’re putting forth. I love the World Cup because of the emotion and passion. The WBC is starting to become that type of event. The timing is unfortunate, as a lot of very talented players are not playing so they can prepare for the major league season.