As the lead marketing writer for a major credit union, I see the ins and outs of the financial world from a unique perspective. Few people in the organization know the full spectrum of products and services like I do, and even fewer have to try to figure out how to best sell them. Thankfully, Credit Karma has given me the opportunity to share some of my thoughts on the former and forgo the latter in favor of a completely up front and honest appraisal of the industry.

So although my paycheck comes from a credit union, and I will occasionally sing the praises of the not-for-profit side of banking, I’m here because I very much appreciate the trend towards transparency that CK, and the internet as a whole, has provided. After all, our financial system is set up in a way that you’d have a pretty tough time avoiding loans, credit, and accounts, so instead of fighting that system, the best thing to do is learn how to take advantage of it. Sure beats stuffing your cash in a mattress anyway (is that even something people still do?).

As time goes on, I’ll be adding my little insights into the financial world alongside the other informative posts on this blog, so if you have any questions for me feel free to ask them in the comments section of this entry. I’ll give you straight answers about what goes on inside the corporate offices of your local banks and credit unions, give you tips on how to get the most from your accounts and credit, and will also let you know when some good promotions come around. Hey, I know you might think you’re sick of being marketed to, but the truth is that you can benefit greatly by keeping your fingers on the pulse of the banking industry because there’s still plenty of money being spent out there to get you to become a customer/member.

Case in point; banks and credit unions are giving away money for everything from opening a checking account with direct deposit to using the bill pay feature of their online banking systems.

I’ll keep an eye out for you, and again, post those questions if you have them.

On a daily basis, we get several emails and questions about why a consumer’s score is different from their other score(s). These questions and confusions on credit are exactly why we developed Credit Karma. To properly answer the question, there are five things that consumers should keep in mind.

1. There are three different credit bureau: Equifax, Experian, and TransUnion. Each credit score is developed with data from one of those bureaus, and each bureau may have slightly different information about a user.  A majority of the information will be consistent, but the bureau used can lead to differences in scores.
2. There are different brands of scores. FICO is probably the best known of the brands of scores, but FICO is analogous to Kleenex for tissue. It’s just the brand name; there are several other tissues that do the same thing. To say one is better to the average consumer is a function of their marketing and brand building. All credit scores are built from the same underlying bureau data using the same mathematical process.
3. There are hundreds of credit scoring algorithms (formulas). Some credit scores predict mortgage default, others auto loan default, and some are for people with short credit history. Even within FICO, there are several different scores for different purposes.
4. Credit Scores can change at any time. A score technically changes anytime the credit data files that drive it changes. Since a bureau can update your credit report at any time, your score can change at any given point.
5. All credit scores are highly correlated (related). A movement within one score or bureau will often be indicative of all other scores. It’s a natural behavior of statistics and how these credit scoring algorithms are built.

For our users, we recognized that all of this information is both confusing and annoying. If you take points 1-4, there are an infinite number scores for any given consumer. To address the problem, we decided to provide one consistent benchmark into user scores. That means we use the same bureau and same algorithm. Everything is the same but time and the information on your credit file. The idea is that if your Credit Karma score changes, it means something in your file changed and your other scores probably changed as well.

I hope this is useful for our users that ask why their scores are different. Let us know what you think with comments below.