I had a conversation yesterday with a client about credit.  I had reviewed their credit and was going over their report and scores with them.  And then, the common reply came, the one I hear from so many clients – “But my free credit APP on my phone said my score was higher…”

I wanted to write about this, because it happens all the time and I wanted to bring some clarity to the issue of free credit apps.  Some of these sources include:  Credit Karma, Credit.com, Credit Sesame, or reported scores to you from your credit card companies such as Discover, Capital One, Chase, and others.


Why are the scores different?

These sites or apps use different algorithms and scoring ranges to calculate your score.  Some use newer formulas created by FICO, while others use older versions of formulas that FICO used to use.  Furthermore, some use scores reported by Experian, Equifax, and TransUnion, and some give you scores from just one of the three bureaus.

Additionally, different types of lending have different algorithms used for score calculation.  Credit scores that an auto financing company pulls will look different than credit scores pulled by a mortgage company or a credit card company.  Many of these free credit score sites or apps do not differentiate between the different types of the credit.  They just report one score.

So what score should you trust?

While these different sources use similar factors to determine your score-  payment history, the credit balances, the types of credit you have, the number of inquiries, and the length of credit – each the factors do not carry the same weight for each company. So these apps and sites that offer you a free score, shouldn’t be viewed as an actual free FICO score, rather a rough idea of what your credit score may be.

To be even more tricky, your credit score could vary from lender to lender, because the algorithms each lender uses can be different.  However, they are usually not dramatically different, so the score is more realistic.  Your credit score is also a living breathing thing that is constantly changing, even on a daily basis.  Good information to remember is “There is no real score.  It’s not like the SATs” – per. Credit.com.

What we have seen is credit card companies that are providing their consumers with their free credit score are much more accurate than free credit score sites or apps.   However, it is still considered best if you get the score that your lender actually uses.

I would recommend focusing on the factors that go into your credit score, since most algorithms use the same factors.

Again these are:

  • Length of credit history
  • Utilization of your credit limits (you want to stay under 30% of the limit)
  • Payment history
  • Different Types of Credit (Installment, Revolving, Mortgage, Education)
  • Number of Inquires