Credit Report / Credit Score

Why Can’t I Trust My CreditKarma Credit Scores With a Good Sam RV Loan?

Written by Steve Rhode

Question:

Dear Steve,

A few years ago, I signed up with Credit Karma and have watched my credit reports ever since. I applied for an RV loan, thinking my scores were in the mid-700’s as is reflected in my Transunion and Equifax reports on Credit Karma.

Was told that they only use Experian (which Credit Karma does not) and that my score showed way below their threshold of 640!! I joined Experian and it showed the score as 675, and the Transunion and Equifax scores in the high 600’s!

There is no way to contact Credit Karma by phone or email. I also am confused by the discrepancy in the Experian score that I got yesterday and the one that the lender used by Good Sam showed. How can I make sense of all this?

Thanks for whatever you can do to enlighten me.

Mary Louise

Answer:

Dear Mary Louise,

I agree it is confusing.

Personally, I enjoy the free credit score service and credit score calculator at CreditKarma.com.

Your issues have less to do with Credit Karma specifically than about credit scores in general.

Credit Scores Are Fluid

Depending on what day of the month the data to calculate your credit score was dumped, it can impact the number you see when you look.

But to make the issue even more confusing, there are two major credit score formulas known as FICO and Vantage. Each of these is really nothing more than mathematical formula lenders have confidence in.

But even within one formula, like FICO the score calculated for an auto or RV loan can be different than your general consumer credit score. This is the result of a FICO Auto Score being calculated differently.

As FICO says, “Industry-specific FICO® Scores incorporate the predictive power of base FICO® Scores while also providing lenders a further-refined credit risk assessment tailored to the type of credit the consumer is seeking. For example, auto lenders and credit card issuers may use FICO® Auto Score or a FICO® Bankcard Score, respectively, instead of base FICO® Scores.”

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I’m assuming the lender elected to use the FICO Auto Score model but we really don’t know what model they actually used or if they created their own proprietary calculation for RV loans.

CreditKarma has guidance about this. They say, “FICO and VantageScore also provide their scoring models to lenders, who frequently tweak the algorithms to serve their own needs. So, in addition to the dozens of scores calculated by credit bureaus, many lenders have their own individual scoring methods.”

The purpose of a credit score is NOT to grade how well you manage your money. It is actually to determine the risk lender’s face if they lend you money for a specific purpose. On any given day you can actually have a variety of different credit scores from the same score source.

All is not lost here. Using the free Credit Karma Credit Score Simulator you can get a general idea about what you need to do to increase your general score.

Typically the easiest ways to quickly increase your scores are to pay down balances or satisfy accounts in collection. But using the credit score simulator you can get a better idea of exactly what moves you can make to increase your score.

I’m hoping Good Sam may have given you a clue about what specific score version their lender used but if not, see if you can find out. The Good Sam site says they use FICO but I’m not sure if that’s exactly what they calculated for your request.

They also say they require a minimum score of 690 and that “The following situations, in addition to other factors, may negatively affect a loan decision: a high debt to income ratio, unverifiable income, a credit score below 690, bankruptcy, outstanding collections, delinquent payment history, limited installment loan history, insufficient collateral value (LTV).”

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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