I am completely baffled with Credit Karma and their method of calculating credit scores. Back in June, when we were getting pre-approved for a new mortgage and our bank provided us with our credit scores, I found it peculiar that there was a substantial difference between my TransUnion and Credit Karma credit scores.

Credit Karma is really only meant to be a tool, which helps assist in estimating your score based on a similar TransUnion calculation and report. Recently Credit Karma added a monitoring service that notifies you if there were any changes in your report. So I found it shocking when last week I received a notification that there was a new hard inquiry from my bank. However, I figured maybe the hard pull from the loan, which we closed back in mid-July, finally trickled its way down to our TransUnion reports. Well fast forward to later last week, and we each received a letter from our bank stating our hard credit pull dated August 23, 2011 showed a score of 788 for me and 753 for my wife. Ok, so what the heck is this about?

So I called my loan officer to see if it was standard practice to pull our credit a month after we closed on a new mortgage. I figured maybe anything is possible in this horrible market. Well our loan officer was completely baffled also because they do not pull credit reports after closing.

The next day I received some credit application in the mail from my bank. So the next step was to contact the bank directly and see why the heck they needed to perform a new hard pull of our credit for this rogue credit line. I am still investigating the matter with my bank, but basically they went ahead and pre-approved us for credit cards without our permission. Who the heck pulls your credit prior to issuing a credit card application? I was told if we were not interested, I could shred the applications. We are really pissed about it, and I am escalating the issue with management this week.

Now that I know why we had our credit pooled again, I wanted to figure out how my score compared with Credit Karma. I updated my Credit Karma score on August 20 (score of 737) and August 25 (743). Again my actual TransUnion score on August 23 was 788. Why the heck is there such a huge point difference? I can understand the scores being slightly different depending on the calculation methodology used between TransUnion and Credit Karma. However, I am showing a point difference of 45-51 points, and I consider that substantial.

So I contacted Credit Karma, and this was the response we received (bolding mine):

Hello,

Our customer support team personnel has replied to your support request #####:

Credit bureaus use many different scoring models, even within the same credit bureau. These credit models and scores vary depending on what type of information the institution that requests the score is looking for.

As an example, mortgage companies will get a different score than a company providing auto loans, since they are looking for different types of credit history and credit factors.

http://www.creditkarma.com/question/difference_in_credit_scores

TransUnion has two primary credit scores. One is called the TransRisk with a range up to 850, the other is called the VantageScore with a range up to 990.

For more information, please feel free to contact us at blog@creditkarma.com.

We hope this response has sufficiently answered your questions.

Thanks for using Credit Karma!
Credit Karma Support

Well I knew the response would cause more questions than answers. However, maybe we learned something here. Could it really be true that depending on what type of loan one applies for there are different scoring models? If this is true, this is completely new news to me. I understood there are different scoring models, even beyond what they mentioned above, but this adds a whole additional layer to the equation.

The positive side to this whole mess is to look at the facts. My wife and my current TransUnion scores are 753 and 788, respectively. Looking back to June, our scores were 753 and 793, respectively. Therefore, my wife’s score stayed exactly the same while I took a 5 point drop. I find this to be VERY good news because we now carry a second mortgage and had to sign-up for all new utilities, which some perform their own credit pulls, albeit, possibly from other credit bureaus.