Credit Karma Update – Still Not Accurate But Close Enough

I previously blogged about Credit Karma and how I found the credit score to be low. Even though I found the credit score to be low, I did find Credit Karma to be a useful tool for monitoring your credit score. During my mortgage refinance journey, I was able to get my hands on my actual credit score from all three reporting companies, which prompted me to do another comparison to Credit Karma.

I checked my credit score from Credit Karma on August 26th and took a snapshot of my credit score (see below). My credit score had increased to 732 from 710 in four months time.

When I finally closed on my mortgage refinance, I received the package to sign a million times, which included the credit scores from all three companies (Equifax, TransUnion and Experian). The date my credit scores were requested was on 05/07/2009. Unfortunately I don’t have an exact data point from Credit Karma to compare the two scores, but the above graph is useful in predicting what my credit score would have been. In April my Credit Karma score was 710 and in August my score was 732. So on May 7th my score should have been around 720.

My Equifax score was 748 (Range: 300-850). My TransUnion score was 754 (Range: 336-843). My Experian score was 749 (Range: 300-850). All of these scores are a good 30 points above the projected Credit Karma score of 720. Once again I find that the Credit Karma score is low compared to the real credit score.

Dings to my Credit Score

My credit report contained all of the reasons for lowering my credit score. The following are the reasons for the hits I took on my credit score:

• Length of time accounts established
• Too many inquiries in the last 12 months
• Time since most recent account opening is too short
• Length of time revolving accounts have been established
• Too many accounts with balances
• Recent revolving balances

Some of these factors I can’t control, others are one time occurrences, while still others don’t make sense. Obviously I can’t control the ‘length of time my accounts were established’ or the ‘length of time revolving accounts have been established’ because I’m only 25.

I’ve had a lot of ‘inquiries in the last 12 months’, but that is only because I closed within the past 12 months, attempted to refinance my mortgage twice and opened credit cards to gain favorable financing or cash bonuses on large purchases for my new condo. I also won’t continue opening more credit card accounts on major purchases as I don’t have many major purchases remaining so the ‘time since most recent account opening is too short’ should disappear.

I don’t really understand the ‘too many accounts with balances’ or ‘recent revolving balances’ dings. I have a pretty standard number of accounts with balances. I have two credit cards (one for gas and restaurants and one for everything else), a car loan and a mortgage. Isn’t that pretty average for the US? Also, I don’t keep revolving balances. I pay my cards off in full every month. Maybe they mean the car loan, but I have less than a year of payments left on that. Don’t most mortgage accounts have large balances, especially less than one year in?

A second instance of a low credit score from Credit Karma is proof enough for me that they will consistently produce a lower score than the official credit score. I do still strongly believe that Credit Karma provides a great way to track your credit score. I will continue using Credit Karma on a regular basis to keep track of the trends of my credit score. On top of it all, Credit Karma is safe.