Credit Monitoring Sites: Are They Accurate?

While credit isn’t always the most exciting topic to talk about, it’s important to understand where you stand with your credit history. After all, your credit has a huge impact on your financial future and well-being.

Your credit can affect where you can live, what jobs you’re eligible for, how much money you can borrow, the interest rate you will pay, and might even have an effect on aspects of your personal relationships.

You might think that you have your credit score nailed down by tracking your credit information through online sites like Credit Karma. While these sites can be helpful to monitor credit updates and use as a gauge, it’s important to know that the score you see on these sites is just an estimate and is likely to vary from the score that your lender will use.

Why?

First of all, Credit Karma only pulls from two of the three major credit reporting bureaus, TansUnion and Equifax, while leaving out credit reporting information from Experian. Credit Karma also uses VantageScore as its credit score model, which can vary widely from the more common credit scoring model, FICO.

Many consumers are surprised to see that the credit score pulled by their lender is actually lower than what they see on Credit Karma, which can be extremely disappointing when going through the mortgage process.

Another reason the score that your lender pulls will be different than that on Credit Karma: your lender uses a special score that is developed specifically for the mortgage industry.          

These are all reasons why it is critical to check your credit report instead of relying solely on credit monitoring sites.

So first of all, what is a credit report?

A Credit Report is a complete report on your history of paying bills and debts, which ultimately summarizes your financial reliability. A credit report:

• May include credit cards, credit agreements, mortgages, and student loans.
• Will list how much is owed and how long each account has been open, if payments have been paid on time, and how often you make payments.
• Will show public records, such as collections and bankruptcy filings.

Here are 5 More Reasons to Check Your Credit Reports:

1. There’s no cost to you—Under the Fair and Accurate Credit Transactions Act of 2003, you have the right to view your report from each of the three major credit reporting bureaus (Experian, TransUnion, Equifax) once a year. It’s free, typically takes less than 15 minutes and it won’t negatively affect your credit. To view your free reports, visit AnnualCreditReport.com. You can opt to pay for your credit score if you’re curious.
2. Let’s you know where you stand—Eventually, it’s likely that you’ll need credit to purchase a car or a house, so it’s important to understand what you have on your credit report. Even if you’re signed up for credit monitoring sites, you might not be getting a complete and accurate depiction of your credit history because most credit monitoring sites do not pull from all three of the major credit reporting bureaus. Checking each of your credit reports is the only way to truly know where you stand.
3. It can help you detect and dispute other errors—Your report could include information from someone else’s report, or it could contain other inaccuracies that were added to your report by mistake. Checking your credit report will help you identify these mistakes and give you the opportunity to dispute and correct the mistakes. Disputing inaccuracies can take weeks to correct, so it’s important to resolve these issues immediately.
4. It could help you catch identify and credit card theft early on—Checking your credit report can help you identify if someone is using your social security number to apply for credit or uses your credit cards as a form of payment. If you notice an unfamiliar inquiry or account when checking your credit, you can call the issuer to figure out why it’s on your report. If it is fraud, you should:
   • Notify social security that your social security has been compromised
   • Notify the police of your stolen identity and file a police report
   • Write a letter to the creditors disputing the fraud and ask them to remove fraudulent information
   • Call the credit bureaus and ask them to place a fraud alert on your files

5. It will help you build a confident financial future—Understanding your credit can help you save money and hassle in the long run. By making sure everything looks ok or resolving issues early on, you can feel comfortable and confident when it comes time to apply for a loan. There will be no need to scramble to resolve issues in a hurry, and you can rest assured that you won’t have to pay extra money in interest due to bad credit.

Have questions or need credit advice? At TowneBank Mortgage, we have a team of dedicated Credit Enhancement Specialists that work to get your credit score as high as possible so that you can have access to more loan products and better interest rates. Reach out to your local loan officer and see how they can help you today.

The information contained here within this blog is for informational purposes only and should not be relied upon for business, financial, tax or other advice. Recommendations and advice should be independently evaluated in light of your specific business needs and advice and counsel obtained if needed. This is not a commitment to lend.