topic Re: Why Credit Karma manipulates "payment history." in General Credit Topics

Why Credit Karma manipulates "payment history."

Anonymous — Tue, 05 Jun 2018 13:39:03 GMT

I've been thinking about this recently and it sort of irritates me. As most people know, Credit Karma's pretty "fluff" software likes to paint a misleading picture for its members. Aside from the non-FICO scores (which many people don't realize are unmeaningful) I'd like to discuss the "Payment History" section under score details/credit factors.

Many are aware that this graphic only takes into account the last 2 years of payment history:

We do know of course that any payment history shortcomings are typically present on a credit report for 7 years and adversely impact both FICO scores and VS 3.0 scores for longer than 2 years. The graphic above also suggests due to it's color-coding that 99% payment history (even in the last 2 years) may be just as good as 100% payment history. 99% by definition means that a payment was missed and of course any profile with a missed payment isn't going to be as good as that same profile without a missed payment.

So, why does CK choose to provide us with this pretty little image? Well, like 99 out of 100 questions in life the answer to this one IMO is "money." We know that CK makes money through advertising products such as credit cards and loans. Disclaimers throughout their pages do disclose this:

Suggested for your credit

We suggest offers based on your credit profile, Approval Odds, and money we make from our partners.

My personal opinion is that when people see that a pretty little fluff graphic that shows they have "100% payment history" they feel better about their profile, which may actually be extremely dirty over 2 years ago. Because they feel better about their profile, they're more inclined to apply for the products (CCs, loans) that are plastered all over every page you access from CK. More clicking those links, more unnecessary apps, more funding for CK.

I understand it, as it's business, but standing in an informed place I see this as quite grimy; members are being manipulated to some degree in order for CK to profit.

This obviously isn't something that's going to change, but I feel it's a thread-worthy topic especially for those that may be newer to their credit journey that are using a tool like CK. It's important to be informed about these things in order for the best decisions to be made.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Tue, 05 Jun 2018 18:50:00 GMT

@Anonymous
Many are aware that this graphic only takes into account the last 2 years of payment history:

I did not know this! I noticed that an old utility bill CO (which I PFD'ed recently) was reporting 2 lates on my 3B Reports, but not on CK and often wondered why. When I finally pulled the 3B's, I was surprised to find those lates.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Tue, 05 Jun 2018 19:16:01 GMT

@Anonymous
I did not know this! I noticed that an old utility bill CO (which I PFD'ed recently) was reporting 2 lates on my 3B Reports, but not on CK and often wondered why. When I finally pulled the 3B's, I was surprised to find those lates.

I'm glad that you know now. I too was fooled by this big time when I first started looking into credit in early 2016.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Tue, 05 Jun 2018 20:10:10 GMT

CK is the poster child of a "buyer beware" type of site. It can be useful for bits of info, but overall can do a great disservice to the unwary by being little more than a veiled CC pusher. I can't imagine how many people have been fooled by the misleading "Approval Odds", now made even worse with what you posted BBS.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Tue, 05 Jun 2018 20:55:14 GMT

Hey BBS. I have been thinking for some time about creating a thread called Credit Karma -- How to Use It. It'd be nice for newcomers to have a go-to thread that would explain what Karma is really good for, and what they need to ignore. If I do I will run it by you first.

Re: Why Credit Karma manipulates "payment history."

Pikaboo-icu — Tue, 05 Jun 2018 21:16:52 GMT

@Anonymous wrote:
Hey BBS. I have been thinking for some time about creating a thread called Credit Karma -- How to Use It. It'd be nice for newcomers to have a go-to thread that would explain what Karma is really good for, and what they need to ignore. If I do I will run it by you first.

Great idea!!!

Wallet Hub is rotten at some things too-

I got an email alerting; " your score has dropped by 15 points"!!

I nearly had a melt down- I logged in and it had actually INCREASED by 6!

This is obvious click bait and should not be allowed..

I only use these as auxiliary score/report/alert options. Credit Sesame, Wallet Hub, Credit Karma

They really aren't very accurate or trustworthy when it comes to important data points.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Tue, 05 Jun 2018 21:57:25 GMT

@AnonymousCK is the poster child of a "buyer beware" type of site. It can be useful for bits of info, but overall can do a great disservice to the unwary by being little more than a veiled CC pusher. I can't imagine how many people have been fooled by the misleading "Approval Odds", now made even worse with what you posted BBS.

Another common one is when their "simulator" tells you that adding a credit card will increase your credit score. A member of this forum recently posted about CK telling him that he'd get a 70 point gain from adding a credit card. Like the "Payment history" topic that I posted about above, the simulator is just another ploy to try and get people to apply for a CC.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Tue, 05 Jun 2018 22:00:42 GMT

@AnonymousHey BBS. I have been thinking for some time about creating a thread called Credit Karma -- How to Use It. It'd be nice for newcomers to have a go-to thread that would explain what Karma is really good for, and what they need to ignore. If I do I will run it by you first.

I like that plan CGID and think that it would be very beneficial. I wish MF allowed subtitles to thread titles, as something like "The Good and the Bad" would be a solid subtitle for the thread. There are times when I write a thread title and either don't have enough characters, or when reading the thread title it can be interpreted multiple ways where a subtitle would sort of solve that issue.

Re: Why Credit Karma manipulates "payment history."

Subexistence — Wed, 06 Jun 2018 13:37:12 GMT

This is another one.

You need to have at least 11 accounts to be in the green. Some people with OCD will need at least 21 to feel better. There's absolutely no reason related to scoring to get at least 11 acounts. I can understand something like 0-3 accounts being in the red but 0-10 doesn't make sense.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Wed, 06 Jun 2018 14:31:18 GMT

@SubexistenceYou need to have at least 11 accounts to be in the green. Some people with OCD will need at least 21 to feel better. There's absolutely no reason related to scoring to get at least 11 acounts. I can understand something like 0-3 accounts being in the red but 0-10 doesn't make sense.

I mostly agree with what you're saying above, especially with respect to 21+ being ideal according to the CK fluff chart. Again, further manipulation of the member to always believe that "more is better" and with CC ads in your face at all times many people likely just say, "why not?" and apply unnecessarily

In another thread recently, though, I was discussing with TT the FICO negative reason statement, "too many or too few accounts." This statement suggests that having not enough accounts or too many can adversely impact your FICO scores. What these numbers are, though, we are unsure of. TT had estimated that the sweet spot range could very well be in the 10-20 range, where that reason statement may be generated at values below 10 or over 20. That being said, I (and probably TT, too) don't believe that any penalty associated with too many or too few accounts is significant; perhaps it impacts score 5 points or so... but of course, that could be profile-dependent.

Re: Why Credit Karma manipulates "payment history."

Subexistence — Wed, 06 Jun 2018 14:39:23 GMT

@Anonymous wrote:
@SubexistenceYou need to have at least 11 accounts to be in the green. Some people with OCD will need at least 21 to feel better. There's absolutely no reason related to scoring to get at least 11 acounts. I can understand something like 0-3 accounts being in the red but 0-10 doesn't make sense.
I mostly agree with what you're saying above, especially with respect to 21+ being ideal according to the CK fluff chart. Again, further manipulation of the member to always believe that "more is better" and with CC ads in your face at all times many people likely just say, "why not?" and apply unnecessarily

In another thread recently, though, I was discussing with TT the FICO negative reason statement, "too many or too few accounts." This statement suggests that having not enough accounts or too many can adversely impact your FICO scores. What these numbers are, though, we are unsure of. TT had estimated that the sweet spot range could very well be in the 10-20 range, where that reason statement may be generated at values below 10 or over 20. That being said, I (and probably TT, too) don't believe that any penalty associated with too many or too few accounts is significant; perhaps it impacts score 5 points or so... but of course, that could be profile-dependent.

Do you think that our binary classification of thin vs thick could be obsolete? Like there could be thin 0-4, thick 5-9, thickest 10-20, too thick 20+. Or do you think the reason that the 10-20 range is not related to thin/thick scorecards

Re: Why Credit Karma manipulates "payment history."

Anonymous — Wed, 06 Jun 2018 14:44:12 GMT

@Subexistence
Do you think that our binary classification of thin vs thick could be obsolete? Like there could be thin 0-4, thick 5-9, thickest 10-20, too thick 20+. Or do you think the reason that the 10-20 range is not related to thin/thick scorecards

I do not. Thick verses thin is still a factor for scorecard assignment. Once "thick" is achieved, though, be it at 3 accounts, 4, whatever, at that point I believe the "too many or too few accounts" reason statement could still remain depending on the number of accounts present.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Wed, 06 Jun 2018 15:44:01 GMT

For what it is worth, only a short while ago the myFICO website was just like Credit Karma in the way that it pushed people to get more and more cards. The banner at the top of every page was a gateway for more cards, with really huge buttons inducing people to apply; and myFICO got a kickback from the issuer for every application.

Not long ago that was removed to a different part of the website: you now have to go to the Savings Center button to get the CC app page. (And yes, there is something a little funny about the page that induces you to expand your capacity to incur debt being named the Savings Center.)

Re: Why Credit Karma manipulates "payment history."

Anonymous — Wed, 06 Jun 2018 17:33:51 GMT

I suppose most if not all of these CMS providers initiate this type of ploy. I get why they do it, but I'm looking it from a far different angle than the majority. The majority of people that fall prey to these sites are those that have come to them due to being either brand new to credit or in a place of unfavorable credit. That being said, many don't understand the ins and outs yet, so they are perfect targets for these CMS sources to push products on.

Re: Why Credit Karma manipulates "payment history."

Subexistence — Wed, 06 Jun 2018 18:00:10 GMT

@Anonymous wrote:
I suppose most if not all of these CMS providers initiate this type of ploy. I get why they do it, but I'm looking it from a far different angle than the majority. The majority of people that fall prey to these sites are those that have come to them due to being either brand new to credit or in a place of unfavorable credit. That being said, many don't understand the ins and outs yet, so they are perfect targets for these CMS sources to push products on.

I wonder if some of them are prepping for a mortgage and were trying to see their scores.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Wed, 06 Jun 2018 18:20:42 GMT

Some, I'm sure.

I do think if we took a poll on here of why people came to MF (or CK, whatever) that the Family Feud #1 answer would be to improve their credit profile/scores.

Re: Why Credit Karma manipulates "payment history."

Thomas_Thumb — Wed, 06 Jun 2018 19:25:07 GMT

@Anonymous wrote:
Hey BBS. I have been thinking for some time about creating a thread called Credit Karma -- How to Use It. It'd be nice for newcomers to have a go-to thread that would explain what Karma is really good for, and what they need to ignore. If I do I will run it by you first.

Don't forget to include TransUnion CBIS as part of the how to use it. It looks like that is the only source available these days for CBIS.

Many similarities but also many differences between TU CBIS and the CBIS market leader, LexisNexis.

Re: Why Credit Karma manipulates "payment history."

Thomas_Thumb — Wed, 06 Jun 2018 19:44:17 GMT

@Anonymous wrote:
@SubexistenceYou need to have at least 11 accounts to be in the green. Some people with OCD will need at least 21 to feel better. There's absolutely no reason related to scoring to get at least 11 acounts. I can understand something like 0-3 accounts being in the red but 0-10 doesn't make sense.
I mostly agree with what you're saying above, especially with respect to 21+ being ideal according to the CK fluff chart. Again, further manipulation of the member to always believe that "more is better" and with CC ads in your face at all times many people likely just say, "why not?" and apply unnecessarily

In another thread recently, though, I was discussing with TT the FICO negative reason statement, "too many or too few accounts." This statement suggests that having not enough accounts or too many can adversely impact your FICO scores. What these numbers are, though, we are unsure of. TT had estimated that the sweet spot range could very well be in the 10-20 range, where that reason statement may be generated at values below 10 or over 20. That being said, I (and probably TT, too) don't believe that any penalty associated with too many or too few accounts is significant; perhaps it impacts score 5 points or so... but of course, that could be profile-dependent.

I have 7 open accounts (5 CC cards, a loan and an AU card) plus two closed ones. Fico says I have "too few accounts with recent payment information" (which probably is referring to open accounts). I got this negative statement every month for over a year - until taking a HP late last year for a CLI. I am clearly missing out on some Fico 8 points because of this (5 points?). Might be costing me 10 points on VantageScore 3.0.

Re: Why Credit Karma manipulates "payment history."

Anonymous — Wed, 06 Jun 2018 20:12:43 GMT

@Thomas_Thumb wrote:
@Anonymous wrote:
Hey BBS. I have been thinking for some time about creating a thread called Credit Karma -- How to Use It. It'd be nice for newcomers to have a go-to thread that would explain what Karma is really good for, and what they need to ignore. If I do I will run it by you first.

Don't forget to include TransUnion CBIS as part of the how to use it. It looks like that is the only source available these days for CBIS.
Many similarities but also many differences between TU CBIS and the CBIS market leader, LexisNexis.

Yup. That was absolutely on my radar as one of the very nice features of CK. CK is the only cost-free service where you can get frequent EQ reports as well as the TU CBIS.

In addition, it has some features that are also available elsewhere, but are really nice to have, such as frequent TU reports and alerts for new accounts (most people say that Karma's alerts are far quicker than myFICO's).

I am even much less opposed than many people to someone making use of the CK front end interface, as long as he has been prepped carefully (e.g. by a How-To guide) on what to use and what to ignore. For example....

CK's CC utilization metric is good and helpful, as long as the consumer:

* has no closed accounts with balances

* has no AU accounts

* understands that percents close to a CC breakpoint could be off due to a rounding error, specifically 0%, 9%, 29%, 49%, etc.

Age of credit profile (i.e. Age of Oldest Account) is good and helpful as long as the consumer is certain that his oldest account is open.

Even the AAoA metric might be valuable if he's determined that his closed accounts have an average age that is fairly close to his open accounts.

The interface is really nice to the extent that it enables you to locate and drill down into specific accounts quickly.

My feeling is that CK has especial value for beginners (or even stingy old-timers) as a site that pairs well with creditScore.com. Karma gives you free EQ and TU reports, and CS.com gives you free EX reports (along with a free FICO 8).

Re: Why Credit Karma manipulates "payment history."

Anonymous — Wed, 06 Jun 2018 20:14:42 GMT

Thanks for weighing in, TT. CKs recommendation for 10-20 accounts I don't believe is a terrible thing, but showing 21+ as also being ideal (suggesting an infinite amount is fine) is misleading for sure and no doubt promts unnecessary credit apps.