Are you checking your credit scores on Credit Karma?

If you recently applied for credit and you were told that your credit scores are different front the ones on your Credit Karma account? It is not that they are wrong, it is that the credit scoring model is generated base on the VantageScore, no the FICO score.

VantageScore and the FICO® scoring models use slightly different criteria to determine your scores but they both predict the likelihood that a person will fall at least 90 days behind on a bill within the next 24 months.

The VantageScore models and the base FICO® models are generic credit scores, meaning they’re created for use by a wide range of creditors, such as private student loan companies, online lenders and card issuers.
FICO® also creates industry-specific auto and bankcard scores, which are built on the same criteria as the base FICO® scores but tailored for auto lenders and card issuers.

VantageScore vs. FICO Credit Scores

Here are some of the main differences between the two companies and their scores:

Minimum Scoring Requirements

For FICO® to create a credit score based on one of your credit reports, you’ll need to have a credit account (or “tradeline”) that’s at least 6 months old and activity on a tradeline during the previous six months (they don’t need to be the same tradelines).
You may be scoreable by VantageScore as long as your credit report has at least one account in it, even if the account is less than 6 months old.
Additionally, neither credit score agency will score a credit report if the report indicates the consumer is deceased.

The Score Ranges

With all these credit scoring models, a higher score indicates you’re less likely to miss a payment, which is why creditors are willing to offer people with high scores the best rates and terms.
The base FICO® Scores range from 300 to 850 and the latest VantageScore 3.0 and 4.0 use the same 300-to-850 range as base FICO® scores.
What qualifies as a good score can vary from one creditor to another. However, on the 300-to-850 scale, a score of at least 670 (for FICO®) and 700 (for VantageScore) will generally qualify as having good credit.

The Importance of Different Credit Scoring Factors

The impact of a specific action on your credit scores will depend on your overall credit profile and the scoring model. However, FICO® and VantageScore only consider the information that’s in one of your credit reports when determining a score, and they generally place similar relative levels of importance on the same types of information.

The main factors that impact your score can be separated into several categories:
• Payment history. Whether you’ve made on-time payments, late payments, have accounts in collections, defaulted on debts or declared bankruptcy.
• Credit usage. Your credit utilization rate, or the amount of available credit you’re currently using with your revolving credit accounts, such as credit cards. To a lesser extent, the amount you owe on installment loans is also important.
• Length of credit history. How much experience you have managing credit accounts.
• Types of accounts. Whether you have experience using and paying off different types of credit accounts.
• Recent activity. Whether you’ve recently applied for new accounts that led to hard inquiries.

Within each category, FICO® and VantageScore may take different approaches to how they use or weight specific pieces of information.

VantageScore® scoring models evaluate credit using similar factors. VantageScore® characterizes their relative importance as follows:

Most influential: Payment history (paying bills on time)
Highly influential: Age and type of credit (establishing a good mix of loan accounts); percent of credit limit used (avoiding “maxing out” cards)
Moderately influential: Total balances and debt (limiting debt to what’s prudent)
Less influential: Recent credit behavior and inquiries (applying for new credit); available credit (avoiding opening unneeded credit accounts)

Derogatory entries also severely impact VantageScore® credit scores, but the company’s latest model, VantageScore® 4.0, ignores certain collections accounts related to medical debt.
While FICO® and VantageScore® differ somewhat on what factors matters most, credit scoring models are all trying to identify consumers who handle credit responsibly. If you adopt and stick with good credit habits, all of your credit scores will tend to improve.