Generally, when I am talking to potential clients, usually for the first time, at some point they bring up their credit score as reported on Credit Karma. Until recently, I have shrugged if off and given a blanket statement about how the Credit Karma score is not the same as a mortgage score and why ours is different. To be honest, I generally disliked the question and the meere mention of Credit Karma would frustrate me.
However, recently I have found them helpful in setting the stage for my first time homebuyers and background information on why the credit score is where it is.
First, a bit of background:
When Credit Karma first came into the market place, many years ago now, they were the first company to offer unabridged access to your credit score. Before their entry into the market, it was hard for a consumer to get a copy of their credit score and see what is reporting. Credit Karma is able to allow anyone to look at their credit score, without it impacting their FICO score, because they use a different scoring model. Credit Karma uses the VantageScore© reporting mode. Historically, VantageScore© was used when banks review applicants for new bank accounts. It’s not the FICO score© lenders use when reviewing credit for a home mortgage decision. Most specifically, the classic FICO score, established in the last 1990’s, is what the mortgage industry bases their decision making on.. This different scoring models is the core of why the Credit Karma credit score and the FICO score are different. There are additional twists and turns, that have to do with mortgage scoring algorithms but this is enough as a foundation for now.
Why Credit Karma can be helpful in the mortgage process:
Here’s what changed my mind about Credit Karma. When I finally signed up for the site, I realized they have an entire section of their website that shows you how many accounts you have open, the average age of the accounts and a lot of other helpful information. So no, the credit score is not accurate for mortgage purposes, but it can be helpful in setting your frame of mind as a buyer. You can see what we see by way of number of late payments, credit utilization etc.
When I speak to each of you, and you share your Credit Karma score with me, I am likely to be less frustrated than in times past. If you are interested in signing up for a Credit Karma account, you can do so at the link below.
If you are in the market for a new home, or seeking to refinance your current residence, lets connect today.