Credit Karma Blog

More about Scores and the Differences

Written by Kenneth Lin May 8th, 2008 at 10:44 AM CDT 9 comments

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.

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.
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.
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.
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.
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.

Topic:

Announcements, Credit Scores

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USER COMMENTS

As useful as the one-credit-score is, I think your service would be much more useful to more users if you had an ‘advanced’ view, where the scores from the different credit unions are shown separately.

by Kraln - June 4th, 2008 at 8:53 PM CDT

That is great feedback. Our goal is to build the right tools around the single score. Perhaps we can address multiple bureaus at that point.

by Kenneth Lin - June 5th, 2008 at 1:26 PM CDT

[...] first step to take is to make sure that you get at least one copy of your credit report every year. You may need to do this on a more frequent basis, especially if you are trying to [...]

by The Importance of Knowing What Is In Your Credit Report | Credit Karma - September 30th, 2008 at 5:06 AM CDT

I agree about showing an advanced view of all credit scores. By the way does CK use Transunion credit cores?

by Justin - October 6th, 2008 at 9:21 PM CDT

“we decided to provide one consistent benchmark into user scores. That means we use the same bureau and same algorithm.”

Well al righty then, you getting close. Now just tell us which “same bureau” your using and we’ll all sleep better tonight.

by jwhjr9 - April 6th, 2009 at 11:19 AM CDT

TransUnion

by Kenneth Lin - April 6th, 2009 at 11:49 AM CDT

It’s unfortunate you use TransUnion since, in my experience, they are the least accurate of the three. Equifax seems to be more up to date and the faster as correcting data when a dispute is filed. Another nice addition would be to show the different models for comparision. In other words, show what a mortgage default model would look like compared to an auto loan default, etc.

by Larry Mires - May 11th, 2009 at 7:14 AM CDT

Thanks for the comment.

Having worked in lending for a number of years, accuracy is fairly consistent across the three bureaus over the entire population. However my past experience shows that certain bureaus have better coverage or accuracy in certain geographies. So you are right in that regards.

As for the models, maybe we can get there one day. Right now consumers are just confused about the existing models so our focus is on education one at a time but I think you make a great point.

by Kenneth Lin - May 11th, 2009 at 11:05 AM CDT

If what the general consumer, like me, is looking for is the standard creditor score, like one you’d get when buying a house; then how about a “standard” variance between the score generated by CK and each of the three CRA’s? That way, the consumer could easily get the CK score, and “adjust” it to approximate each of the CRA scores. That would be way cool.

by Tim Hawkins - June 23rd, 2009 at 1:17 PM CDT