Credit Karma has announced a number of changes they’ve made to their website. The main change that they have announced is that Credit Karma will now use the VantageScore 3.0 as their sole credit scoring model, in the past they have also used the TransUnion TransRisk score. The new score that Credit Karma are using will still be based on consumers TransUnion credit report. Given that Credit Karma was already providing their users with VantageScore’s, they are really just eliminating one of the scores being offered to consumers.
[Read: Credit Karma, Is It A Scam?]
They’ve also made a number of cosmetic changes in the hopes of making the website more light weight and faster. Personally I think the move from the TransRisk score is a good one, at least some lenders actually use VantageScore when making their lending decisions. That being said, the FICO scoring model still dominates this market so it would’ve been nicer to see them replace TransRisk with a free FICO score. I think the decision was made on a cost basis (it would have been too costly to provide 30m free FICO scores every month).
[Read: Get your FICO score for free]
Credit Karma’s main business is recommending credit cards to users, one way they do this is by displaying the average and lowest credit scores that successful applicants had when applying. They have confirmed that their models for recommendations will be adjusted to leverage VantageScore 3.0 and that historical data will not be lost.
Personally I don’t see this as a big upgrade or change. Them giving consumers access access to their full TransUnion credit reports, updated weekly was much more useful. The pressure will be on for Credit Karma and other free credit monitoring services (Quizzle, Credit Sesame, Credit.com, Wisepiggy) to compete, now that more and more credit card issuers are offering free FICO scores to cardholders.
I’m also lead to believe that Credit Karma will be releasing an online dispute center which will allow their users to dispute information found on their TransUnion credit report. When asked for comment regarding this online dispute center their official response was “[We] do not have any information or timeline associated with an error dispute feature”. It’ll be interesting to see how this feature works if it is released, I imagine that consumers will still be better off disputing negative items in writing using registered mail so that a clear and track-able paper trail is created.
F.A.Q’s
My score has dropped/changed? Why?
VantageScore and the TransRisk score use different scoring criteria, because of this a consumer is likely to have two different scores depending on which scoring model is used. Your underlying credit risk hasn’t changed, so you’re no more or less likely to be approved for credit because of this change by Credit Karma.
If you have any other questions, please feel free to ask them in the comments.
