I was on CreditKarma this weekend and was looking at my credit score. One of my favorite features of CreditKarma is that it shows how your credit situation compares to others.
The “report card” feature shows the important factors in a credit score, tells you how important each is for your credit score, your situation, how you compare to others, the average credit score for each group, as well as a few other metrics to show how meaningful that factor is in comparison to others.
I really love this feature because while a 706 might be just a score, we can take a closer look at our situation, find where we can improve, and take action to improve certain areas.
What I found interesting was that correlation between the factors and credit scores. For the most part, it was not surprising. They have graphs showing that people who make more on time payments have better scores that people who do not. The more times we miss, the more our score will suffer. Makes, sense, right?
Well, once fact that I found surprising was that there was no correlation between certain factors and credit scores. My favorite example is the graph showing the average credit score based on the amount of debt owed. Those with no debt average a 696 credit score, while those with $1-5,000 of debt average a 677 score and those with $5,001-$49,999 of debt average a 640 credit score. (the orange bar is where I fall)
Then, the trend reverses. At $50,000 and above, the more debt accrued correlates to a higher credit score. Actually those with over $150,000 in debt have an average credit score greater than those with no debt!
Why? I have no idea (maybe too small of a sample size? I think they only take into account people who have used CreditKarma). But if you know, leave a comment below!
Readers, do you find this feature from CreditKarma useful? Does it gives you a better idea of your credit situation?