Why are credit score apps different from a lender’s pull?

Ever heard a consumer say: “I had much higher credit scores on Credit Karma than what you’re pulling right now, (insert lender’s name here). Why is that? Did you just drop my score? Why are the mortgage scores so much lower?”

This is a very common conversation between lenders and their customers across the nation. Tune in as Rick Guerrero sits down with Micah Curtis, regional director at Home Loans Assist, to break down why consumers might see so much variance in scores from Credit Karma to a lender’s pull. Here are a few of the key takeaways:

• There are different FICO algorithms used to calculate consumers’ scores.
• Websites like Credit Karma don’t use a FICO scoring model. Instead, they use a VantageScore model.
• On average, these scores will be 40 to 60 points higher than what a loan originator or a banker will see because, as Curtis mentioned, “the algorithms used in the mortgage industry are completely different.”
• Factors like late payments or collections are weighted differently in the mortgage industry versus a consumer finance website like Credit Karma.
• It’s almost important to note that websites like Credit Karma aren’t trying to give consumers loans or assess risks. In addition, Credit Karma offers a snapshot of your credit score based on only two years of spending behavior.

Rick Guerrero is the Director of Branch Sales and Strategic Partnerships at US Mortgage Corp. You can follow him on Facebook or connect with him on LinkedIn.