A Guide to CreditKarma.com’s Free Credit Scores

As a CreditKarma.com member, you have access to three free credit scores: your TransUnion Credit Score, VantageScore and Auto Insurance Score. All three of these scores are calculated from the data in your TransUnion credit report, but they differ slightly in their factors and uses.

TransUnion Credit Score

This score, which ranges from 300-850, is calculated from TransUnion’s proprietary scoring algorithm. It is used by lenders to assess a consumer’s creditworthiness, or the chance you’ll default on a loan or line of credit, and can influence lending decisions. Your TransUnion credit score is derived from the following factors:

• Open credit card utilization (high importance)
• Percent of on-time payments (high importance)
• Number of derogatory marks (high importance)
• Average age of open credit lines (medium importance)
• Total number of accounts (low importance)
• Total hard credit inquiries (low importance)

Read more about the factors that make up your credit score.

VantageScore

The VantageScore, which ranges from 501-990, is a credit scoring model created collaboratively by the three major credit bureaus: Equifax, Experian and TransUnion. With this score, the credit bureaus aim to make credit scoring more consistent and accurate across all the bureaus. In order to make it more understandable for consumers, VantageScore grades consumers’ creditworthiness on an easy A to F letter scale:

• A: 901-990
• B: 801-900
• C: 701-800
• D: 601-700
• F: 501-600

VantageScore has released the categories of its credit score calculation and how each is weighted:

• Payment history (32%)
• Credit utilization (23%)
• Credit balances (15%)
• Depth of credit (13%)
• Recent credit (10%)
• Available credit (7%)

Traditional credit scoring models weigh credit history heavily, and consumers with shorter credit histories often generate a “thin file.” The VantageScore model tries to remedy this by putting more weight and emphasis on the past 24 months of credit history.

Although the VantageScore is newer than other credit score models, it is currently used by four of the top five financial institutions, five of the top five credit card issuers and two of the top five auto lenders.

Auto Insurance Score

Your Auto Insurance Score, with ranges from 150 to 950, is also calculated using data from your TransUnion credit report and is used primarily by auto insurance companies. It helps insurance companies assess the risk of insuring a consumer by measuring the likelihood of a claim being filed.

The fact that data in your credit report can affect your auto insurance rates may seem unfair, but studies show that there is a correlation between credit behavior and the likelihood a consumer will file a claim. In other words, consumers with higher credit scores tend to file fewer insurance claims and, as a result, are typically given better rates.

Your Auto Insurance Score is used by the 15 largest auto insurers to measure insurability and price your rates.

The Bottom Line: Remember that these three scores will differ from one another because they weigh the data in your credit report differently. Therefore, it’s important to pay attention to and track the factors influencing your score , rather than just the three-digit number. Working on improving the individual factors should result improved credit health across the board. CreditKarma.com provides these three credit scores free of charge, so come back to update and check your progress as often as you like.

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