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"Soft searches", i.e. what you see from credit karma or what even your bank might show now when you log into their website, are just estimates of your score. In

by cactus2093 6y ago

"Soft searches", i.e. what you see from credit karma or what even your bank might show now when you log into their website, are just estimates of your score. In fact there really is no "your score", the only way to know if you'll be able to be approved is to apply for the loan which requires a hard pull and the lender will interpret the report however they want and translate it to their own version of your score that you'll be evaluated on. It's very common that credit karma will show a decent score, and then when the person applies for a loan or mortgage the score the lender uses comes up much lower and they get denied, and there's little they can do about it except try again later and hope the number went up. > On the latter example, would you lend vast sums of money to someone who has never demonstrated their ability to manage and repay a loan? I think this is a misunderstanding of the role of debt in the world today. Access to debt is all but a necessity to have any hope of financial stability. Prices of large costs like housing and college tuition have increased in massive surplus of the average person's ability to pay for them, which in many ways is a huge problem in and of itself, but the only way the system even sort of still works is easy access to debt. In these circumstances it really doesn't make sense to just shrug it off and let some people fall through the cracks with no recourse because the antiquated and opaque system didn't approve them.

owenmarshall 6y ago
> It's very common that credit karma will show a decent score, and then when the person applies for a loan or mortgage the score the lender uses comes up much lower and they get denied, and there's little they can do about it except try again later and hope the number went up. It goes beyond "there is no 'your score'" – there are absolutely credit scores that really matter, it's just the overwhelming majority of people who monitor their "score" from a free monitoring site are looking at something that may be at best a poor simulation of that score. From what I've learned from a friend who did banking software development for decades: almost every lender pulls a FICO score from all three reporting agencies, discards the high and low, and uses the middle score to make their lending decision. In some cases lenders go out of their way to avoid building in manual underwriting because the score is typically quite accurate and manual underwriting allows bias to enter the system that may open up fair lending/housing lawsuits. Credit Karma doesn't provide a FICO score. Most places that give you "free credit scores" don't. My friend says they jokingly call this a FAKO – a fake FICO. It means next to nothing because they tend to be based on an alternative model like VantageScore that isn't what lenders use to make decisions. If you want a real FICO score, you can buy them from myfico.com and get them from all three bureaus, or you can get a credit card that gives you one: all Discover cards give a monthly FICO 8 from TransUnion and AMEX gives a FICO 8 from Experian (not sure if it's all the cards, and don't go to the "give my credit score" link on their site – you have to find the link to your FICO score) His tl;dr: "a site that tells you your credit score means nothing, a site that tells you your FICO score means a great deal".
kbutler 6y ago
> Prices of large costs like housing and college tuition have increased in massive surplus of the average person's ability to pay for them, which in many ways is a huge problem in and of itself, but the only way the system even sort of still works is easy access to debt. Easy access to debt financing drives up those prices. If people can't afford purchases w/o incurring debt and loans aren't available, prices would fall. Instead, you're advocating making it easier for people take loans that exceed their ability to pay? That's not rational from either a borrower, a lender, or a systemic perspective.
andoriyu 6y ago
You're confusing a lot of things. FICO score is one thing, Vantage Score is another thing and credit report is another thing that is used to calculate scores. There are plenty of free options to get your real FICO score - discover gives it, Experian has a free plan. They give you your FICO score + summary of the report. Creditors don't use that... First, shopping for a loan usually involves soft-pulls of your report and that gives you an interest rate and general idea if you get approved or not. Then you satisfied with rate and decide to proceed with loan - hard pull happens, this one gets recorded. Important thing - they pull your entire credit history, not just score, in fact there is no way to pull score. Then they either approve you or ask for more documentation like: bank statement, pay stubs, W2, etc. You can have 700s credit score while being deep in debt. Also, my FICO score was always higher than my Vantage score, not other way around. Even paid Experian cost like 15$ a month and it shows you all your FICO scores: general, auto, house lending, banking etc. It's dumb to start shopping for a mortgage relying on just CK vantage score.

owenmarshall 6y ago

> It's very common that credit karma will show a decent score, and then when the person applies for a loan or mortgage the score the lender uses comes up much lower and they get denied, and there's little they can do about it except try again later and hope the number went up. It goes beyond "there is no 'your score'" – there are absolutely credit scores that really matter, it's just the overwhelming majority of people who monitor their "score" from a free monitoring site are looking at something that may be at best a poor simulation of that score. From what I've learned from a friend who did banking software development for decades: almost every lender pulls a FICO score from all three reporting agencies, discards the high and low, and uses the middle score to make their lending decision. In some cases lenders go out of their way to avoid building in manual underwriting because the score is typically quite accurate and manual underwriting allows bias to enter the system that may open up fair lending/housing lawsuits. Credit Karma doesn't provide a FICO score. Most places that give you "free credit scores" don't. My friend says they jokingly call this a FAKO – a fake FICO. It means next to nothing because they tend to be based on an alternative model like VantageScore that isn't what lenders use to make decisions. If you want a real FICO score, you can buy them from myfico.com and get them from all three bureaus, or you can get a credit card that gives you one: all Discover cards give a monthly FICO 8 from TransUnion and AMEX gives a FICO 8 from Experian (not sure if it's all the cards, and don't go to the "give my credit score" link on their site – you have to find the link to your FICO score) His tl;dr: "a site that tells you your credit score means nothing, a site that tells you your FICO score means a great deal".

kbutler 6y ago

> Prices of large costs like housing and college tuition have increased in massive surplus of the average person's ability to pay for them, which in many ways is a huge problem in and of itself, but the only way the system even sort of still works is easy access to debt. Easy access to debt financing drives up those prices. If people can't afford purchases w/o incurring debt and loans aren't available, prices would fall. Instead, you're advocating making it easier for people take loans that exceed their ability to pay? That's not rational from either a borrower, a lender, or a systemic perspective.

andoriyu 6y ago

You're confusing a lot of things. FICO score is one thing, Vantage Score is another thing and credit report is another thing that is used to calculate scores. There are plenty of free options to get your real FICO score - discover gives it, Experian has a free plan. They give you your FICO score + summary of the report. Creditors don't use that... First, shopping for a loan usually involves soft-pulls of your report and that gives you an interest rate and general idea if you get approved or not. Then you satisfied with rate and decide to proceed with loan - hard pull happens, this one gets recorded. Important thing - they pull your entire credit history, not just score, in fact there is no way to pull score. Then they either approve you or ask for more documentation like: bank statement, pay stubs, W2, etc. You can have 700s credit score while being deep in debt. Also, my FICO score was always higher than my Vantage score, not other way around. Even paid Experian cost like 15$ a month and it shows you all your FICO scores: general, auto, house lending, banking etc. It's dumb to start shopping for a mortgage relying on just CK vantage score.