Why that “free” credit score you just got is probably useless

Navigating the credit score landscape is sometimes treacherous for consumers, with so much confusing and seemingly contradicting information about scoring models, multiple credit bureaus, reporting guidelines, and plenty of websites offering “free” credit scores.


In fact, when someone clicks on one of those offers to view their credit score, they will quickly find out that the free offer:

1) Isn’t free, and

2) Also may not be accurate or even particularly useful.

If #2 comes as a shock, let me explain.

Most people understand by now that there are three major credit bureaus, Experian, Equifax, and TransUnion, offering their own credit reports. And they may even understand that FICO releases a score based on those findings.

But most consumers don’t realize that there is more than one version of FICO scores (in fact, there are more than two dozen FICO scores!).

FICO also isn’t the only game in town, since Vantage calculates their own version of consumers scores. Your Vantage score is also the score you’ll probably get if you request a free credit score from one of those sites.

The problem is that it’s most likely not even relevant or useful.


90% of lenders don’t use Vantage Scores to make their lending decisions, but one of FICO’s many versions.

So it’s sort of like studying multiple choice answers from last year’s test and then expecting to pass this year’s version.
However, 85% of consumers who get scores from Credit Karma or one of those “free” credit sites think they’re getting the score that’s used by lenders. Moreover, 65% think they’re actually receiving their FICO score – not Vantage.

While I know at least two parties (like Vantage and those money-making free credit websites!) that argue Vantage Scores are great for educational purposes and probably mirror the general trend of your FICO scores, the two scoring models aren’t even calculated the same.

In fact, Vantage scores range from 501 to 990, while FICO scores range from 300 to 850.

Even within FICO’s different internal scoring models, there’s a great variance in scoring for the same person.

Reportedly, 45% of the population has an “economically meaningful” difference between their highest and lowest FICO Score. We’re not talking about just a few points here, either. FICO’s research shows that the average difference between a single consumer’s high and low FICO score, depending on which model of scoring is being used, varies 62 points. And 10% of consumers have a score variance of 100 points or more!

Why is this revelation that Credit Karma and other free-ish credit websites use Vantage, not FICO, so important?

If you’re just taking a quick look at your credit for fun and like wasting money, then it’s probably not a problem.

But for most people, they look at their credit score with the intent to taking action based on what they see. That can be paying off debt or applying for new credit cards, business loans, auto loans, or even home mortgages.

Thanks to purposeful confusion on Credit Karma and other sites, tens of millions of consumers are making critically important financial decisions based on their Vantage Scores – NOT the FICOs that lenders are using to qualify them.
Who knows how many people could qualify for a mortgage based on their FICO Score but give up before they even start because their Vantage Score reflects otherwise? Consumers might apply for the wrong credit cards, hold off on that business loan, or even overvalue their position when applying for loans, all of which can cost them huge money unnecessarily.

However, if you access your FICO score, you can be confident you’re looking at the accurate credit reporting data and score that almost all lenders are using.

In fact, FICO has more than two dozen versions of their scoring for different purposes, with nine of those versions widely used by the three national reporting agencies.

Each FICO version has a specific purpose or use. For instance, if you’re getting an auto loan, lenders probably use FICO® Auto Score 8. FICO® Score 9 is usually employed for medical collections, and credit card lenders have a number of choices between FICO Bankcard Score 8 and versions 2, 4, and 5.

Mortgage lenders typically use FICO scores 2, 4, and 5, which are wrapped into a credit reporting portfolio called a residential mortgage credit report, or RMCR.

But before you get too confused, just remember this: only go to Credit Karma or spend money on one of the credit reporting sites if you want to get your Vantage Score.

However, if you are looking for the same information that lenders are actually basing their decisions on, you can view your full credit reports from all three bureaus once per year for free at www.annualcreditreport.com

Even better, Blue Water Credit can help you get your most recent and accurate credit report and scores, as well as improve your scores before you apply for a loan.