Why People Don’t Don’t Like The FAKO Score
Some people who have a problem with FAKO scores point to a number of reasons why they feel a FAKO score is inferior to your FICO score. One of the reasons is when a lender pulls your credit score, they are going to be looking at your FICO score, not one of the scores that you get from Credit Karma. On the surface, this makes sense, but the reality is that there probably isn’t a whole lot of difference. That’s because you don’t have a single FICO score. Different lenders will be pulling scores that are weighted to take into account the risk factors that matter most to them. For example, the score the car dealership gets for you from FICO will be different than the home loan officer. In other words, the score they get will most likely not be the same number that you receive from FICO.
Another complaint that’s often made is that a FAKO score isn’t as reliable as a FICO score, and this may mislead those who are getting them. It’s certainly true that anyone who gets a free credit score from Credit Karma needs to realize that the score is not their true FICO score, but that doesn’t necessarily mean that the score is unreliable.
What Do You Need Your Score For?
A lot depends on how the consumer is actually going to use the credit score. There’s an implied assumption that those who are seeking out their credit score are only doing it because they soon plan to take out a loan. This certainly could be the reason that they want to know their credit score, but there are also a lot of other legitimate reasons that people are interested in what their credit score is. It’s how the consumer wants to use the credit score that determines which of the two is a better choice.
When Using Credit Karma Is A Good Idea
If you aren’t going to be getting a loan right away, getting a free credit score from Credit Karma has the huge advantage in that you can track how your score changes over time. This can give you a better understanding of what affects your score and how it can change, depending on how you handle your finances. By being able to see your score on a monthly basis, it gives you a wonderful opportunity to improve your score. You can also get free credit monitoring so if something is put into your credit report that doesn’t belong there, you can catch it right away, so that your score remains high, rather than get a huge surprise if you are planning to take out a loan.
Another huge advantage that Credit Karma has over getting your FICO score is that it’s free. If you want to find out your FICO score from MyFICO, it’ll cost you $14.95 (although you should be able to find online discount codes which will allow you to get it for less than this). So if your main purpose for wanting a credit score is to see where it is and try to improve it for the future, Credit Karma (or other sites that give free FAKO credit scores like Credit Sesame or Quizzle) should fit the bill perfectly and make for a better option than your FICO score.
When You Need To Get Your FICO Score
If, on the other hand, you need an accurate score because you will be applying for a loan, I would probably opt for your MyFico score. As mentioned above, it’s probably not going to be exactly the same as the lender will get, but it’s the basis of that number so it shouldn’t be too far off of it. With Credit Karma (or any or the other sites), you simply don’t know how far off it will be, and in some cases a 10+ point swing can mean a different interest rate.
It’s also important to note that there is a risk to using third-party services for your credit score like Credit Karma. They recently were forced to settle with the Federal Trade Commission (FTC) do to lax security on their mobile phone app which left their customer’s sensitive financial information vulnerable to hackers. There is always an added risk of having sensitive financial information stolen when you give it to third-party sites like Credit Karma.
There is also a third option. A number of credit cards like Discover have started to give customers their FICO credit score on their monthly statements. If you aren’t credit card adverse and you have the discipline to always pay off your credit card balance each month, this can be a great alternative to the two.
For how to raise your credit score, or other ways to check your credit score check out these articles.
How to Raise Your Credit Score By 200 Points
Credit Cards That Give You Your Credit Score for Free
Forget Credit Scores: Now Almost Anyone Can Finance a Car
(Photo courtesy of Sean MacEntee)
I opted for the Discover card option and have absolutely no regrets. I don’t have to go to another site to give information and my latest credit score comes in the mail each month. Very convenient and I’m so happy they started doing that.
Thanks for this! I didn’t know about FAKO – that term makes me laugh LOL. I just cancelled myFICO monitoring because of the expense. I plan on going to Credit Karma and it seems like it’ll be sufficient for my needs. I’m not looking to take out a loan just working on building my score. The one free report a year should be enough for me to get my “true” score when I need it.
Twice I have looked at my “free” credit score with Credit Karma and then purchased my actual score from the companies and both times they were 30-50 points off!!! So, be advised, it is not very accurate! But it is a great starting point……..
I concur. My score has been off by quite a bit too. As the articles implies, it’s good for tracking long term, but not if you need an accurate assessment of your FICO score.
Your free annual credit report does not include your score.
Credit.com is also another free monitoring site that provides Experian information. I like Credit Karma because of the tools and all the stats they give on credit card offers, but the score is off by a lot most of the time compared to my actual FICO.
I like to use the services to keep an eye on any unexpected fluctuations in my credit score. There was a time that I needed to know them because my credit wasn’t so good, but it has improved greatly over the years that is no longer an issue. Still, it’s nice to know what the credit score is, and if it is changing from month-to-month. If it is, then I can train figure out what is causing the fluctuation. It’s a free service, so why not?
Dave Ramsey says that you don’t need a credit score. If you are worried about a credit score, what you are really worried about is your debt score. You shouldn’t have any debt at all so you don’t need a credit score. If you are trying to get your credit score up, you’re doing it all wrong.
Dave Ramsey would be wrong on his credit score advice: http://savingadvice2.wpengine.com/2013/08/19/1017549_dave-ramsey-sucks-credit-score-advice.html
So, if you follow this philosophy, why are you reading and commenting on articles concerning the very practices you “don’t need”.
Well you gotta be able to buy a house and most American’s can’t do that without credit. Not everyone can buy a house cash. Which means you have to have some debt in order to qualify for a house. Once you get that credit established and have your down payment then you can work the debt snow ball. Better than throwing our money away on rent. Dave is really good at teaching debt management and getting out of debt and offers many tools but those tools work best with an income of over $200,000 per year. Not everyone has that. So you have to do what you have to do for your family.
Dave Ramsey is not a financial adviser. Ramsey is an entertainer who tailors his “advice” to his audience. An audience which is essentially desperate people who are not financially literate.
There is no such thing as a debt score.
Of course you need a credit score. As an example, your auto insurance premium in most states will see a nice reduction if you have a good credit score. My reduction is 35 percent.
Other than to advise people not to abuse credit, most of what Ramsey teaches is foolish.
I recently purchased a house. Prior to applying for a mortgage, I got my free credit score from another free credit website. Like Credit Karma, it used credit data from TransUnion, but the score model is proprietary. My score was 3 points lower than my mortgage FICO score from TU, so these scores can be accurate.
Use these free credit score websites and you’ll get a fairly good idea of your FICO. Credit Karma (derived from Trans Union), Credit.com (derived from Experian), Credit Sesame (derived from Experian), Quizzle (derived from Equifax).
The mortgage lender I’m using does not use FICO. Instead, it goes through a credit verification company to get 3 separate scores from the bureaurs, then take an average. There are under writing guidelines regarding credit score.
That sum refers to the VANTAGE SCORE you can obtain through CREDIT KARMA which blends the 3 major credit bureaus of TRANS UNION, EQUIFAX and EXPERIAN.
Stacey – in my experience, mortgage lenders are NOT using the VANTAGE score as seen on Credit Karma (I used to make software for mortgage underwriting).
The standard scoring model for mortgage underwriting (at least as of a year ago) is FICO ’04, which comes in different flavors, depending on the credit reporting agency — Beacon 5.0 (Equifax), FICO-II (Experian), FICO Classic 04 (TransUnion).
Discover card is the best. You get monthly fico score update.
FICO is total BS.My total utilization increased from 2 percent to just 3 percent and my score dropped 11 points.
I paid off my bills , open a discover card and a Walmart card. Walmart card added about 6 points to my credit score. I got an alert from my fico stating address change and my credit score went down 14 points (Experian). Paying off my bills didn’t increase my credit score and even though the discover card was approved it does show on my file yet. They said I would be getting it around early Nov. 14 days after the 18th October when it was approved.
Also why do credit karma and capital one credit tracker show my debt paid off and my fico does not.
In my experience, my FICO score (through Discover) always takes the longest to update (compared to Credit Karma).