Credit Karma (more like Credit Liars)

[Bob W]

Credit Karma and Credit Sesame both switched over to reporting Vantage credit scores a few months back.  The scale and the criteria are different than the FICO/FAKO algorithms used previously.  Your score likely changed with the changeover.

I used Credit Karma for many years as a way to check the credit report changes, even before they started providing the full report from Transunion and now from Equifax.  My score was always 40 or 50 points below a FICO score pulled by a mortgage lender.  Part of the issue is that, unlike FICO scores pulled for loans, the Credit Karma algorithm did not group all credit pulls for a mortgage or car loan in a 30 day window as one pull.  If you applied with multiple lenders, that would drag down the Credit Karma FAKO score.  That they did not group credit pulls for the same product in 30 day windows was clearly stated on the site at the time. 

However, my score was always significantly lower than a lender pulled score.  The offers that are targeted to you are based on their score, not your actual FICO score for that product and that lender and therefore not your actual creditworthiness.  I thought it might be possible that the Credit Karma algorithm was deliberately underestimating scores to get people to apply for lower quality, more expensive loans and credit cards through them.   

Given the importance of credit score in consumer borrowing costs, in my opinion these providers of scores should be regulated and audited by the agencies that protect consumers for various loan products.  There is just too much conflict of interest in providing a consumer a score that may or may not reflect their true creditworthiness and offering products based on that score.

thanks for that

[RexualChocolate]

I can tell you with 100% certainty that government regulation would have absolutely no benefit in this sector with plenty of potential for damage.

[Bob W]

I can tell you with 100% certainty that government regulation would have absolutely no benefit in this sector with plenty of potential for damage.

Since the credit industry is heavily regulated already it doesn't seem to have hurt the FICO folks much?   They all have lobbyists anyway so they can write the regs however they like.     

If we had any real decent regulation it may be something along the lines of "Hey,  the credit history of our citizens are their "papers" as noted in the constitution and they have a right to privacy.   So why don't you just quit compiling their information without their signed consent?"    Or at very least they should be sending each person a check for $20 per year. 

Thing is while I may have signed a consent when I took out a loan on a car to report payment history to the credit bureau,  I never ever signed a consent for the credit bureau to sell that information to anyone who wanted to buy it.   They have laws now about girlfriend pictures.  It is alright to take them with their consent.   It is not alright to sell them and publish them.  Maybe not the best analogy but private is private in my mind. 

Same goes for all these internet data bases tracking my every move on the net and then selling the data.   Wrong,  Wrong,  Wrong!