Table Of Content
What Is Credit Karma?
Credit Karma is a personal finance service that aims to help you remain up to date with your credit score, details of your credit report and also potential credit breaches. The Credit Karma team appreciates that if you’re conscientious about credit, you can work on your finances and achieve improvements in your credit score.
However, Credit Karma does not simply help you keep on top of your credit details, it also offers tools to help you find and qualify for the best credit products for your circumstances including credit cards, auto loans, personal loans and auto insurance.
All of these services are offered free of charge, as Credit Karma supports its enterprise by commissions earned from the product recommendations it makes according to your credit profile.
To date, the Credit Karma user base has grown to over 120 million. This massive growth has triggered an expansion of its services, as it now offers services related to your driving habits and your mortgage with lines of credit and other personalized services.
While this all sounds very impressive, what does it mean in real terms? Here we’ll delve into a Credit Karma review to help you decide if this is the right platform for you.
Credit Karma Features
As we’ve touched on above, Credit Karma has a number of platform features that can help you to take control of your credit profile. These include:
This is the flagship feature of the Credit Karma platform. You can enjoy snapshots of your Vantage 3.0 credit score for free.
You can also access your TransUnion and Equifax credit reports on the platform. Your credit reports are presented to make it easier to examine credit score factors that can help you work on your overall score.
Credit Karma also has simulator tools that can help you get an idea of what would happen to your credit score in various scenarios.
For example, you can explore what would happen to your credit score if you take out a loan or mortgage, carry a balance or even use a 0% credit card.
If you want to learn more about how credit scores are calculated, the credit score tracker is for you.
It measures the various factors including credit utilization, payment history and usage. You can also compare your credit to others by income bracket and age.
You can access updates for Equifax and TransUnion credit reports. This is a great feature for checking unusual entries or errors. If you find an error you would like to report, you can link directly to TransUnion.
This is a fairly basic suite of tools, but you can check for past data breaches and it provides encouragement to freeze or lock your credit if you have identity theft concerns. However, you cannot initiate this via Credit Karma.
The marketplace is Credit Karma’s primary income stream. The platform makes money by referring applicants to lenders.
The marketplace allows you to compare loans, credit cards and other credit products. If you begin your application via the marketplace, Credit Karma earns a commission.
This is a recent addition to the platform, but you can now enjoy a high-yield savings account via Credit Karma (provided by MVB Bank). The account has no fees or minimums, but you are limited to six withdrawals per month.
This is another fairly new feature, but you can input your savings and income to generate an estimate of your home buying power. This will provide you with a figure for the maximum amount you could be approved for.
Credit Karma Pros and Cons
No platform is perfect and there are both pros and cons associated with Credit Karma. It is important to be aware of these before you make a decision to use the platform.
Free to Use
Biased Product Recommendations
Platform Lacks Intuition
Does Not Provide a FICO Score
Access to Other Financial Tools
The platform is completely free to use. While Credit Karma does earn a commission when it connects you with a lender, there is no charge to you.
While it is not available for all three credit bureaus, you can get daily scores from two. This can provide you with insight into how your score changes with your activity.
You can use this feature with various “what if” scenarios to see how your decisions will impact your score.
Whether you’re interested in an auto loan or a new credit card, you can use the Credit Karma marketplace to comparison shop.
You can also use the Credit Karma platform to file your taxes or explore savings accounts.
While you can click through to apply for various credit products, you cannot link financial institutions to your Credit Karma profile. This means that you can’t get an overall picture of your finances in one place.
Since Credit Karma does receive a commission when you apply for credit products from the site, there is some question about the platform’s bias.
It is possible that you may receive recommendations based on the commission Credit Karma receives rather than it being the best product for you.
Although Credit Karma must be commended for expanding its feature set, the site itself is a little tricky to navigate.
If you’re new to understanding credit reports and products, you may find Credit Karma a little lacking in intuition.
The platform does offer VantageScores, but this is not the same as a FICO score.
Unfortunately, since many lenders use FICO, you may not find the score projections as useful to predict approval decisions.
How Accurate is Credit Karma?
Although Credit Karma uses data from your actual credit reports, there is some question about its accuracy.
The reason for this is that it uses data from two of the three major credit bureaus; Equifax and TransUnion. This means that your Experian credit data is not factored into the Credit Karma calculations and predictions.
As we touched on above, Credit Karma also provides Vantage scores rather than FICO scores, which also adds to some discrepancies in its accuracy. Since many lenders use FICO, you cannot fully rely on the score projections provided on the platform.
Is Credit Karma Free?
Yes, Credit Karma is a free to use platform. Although you do need to sign up and provide some basic details, there is no subscription charge or add on fees. This means that you don’t need to pay to use any of the tools or features on Credit Karma.
If you decide to go ahead with a loan or credit card via the platform, there is a commission, but this is paid directly from the lender to Credit Karma. This means that you don’t need to worry about any charges being added to your quote.
How Do I Set Up a New Credit Karma Account?
Setting up a new Credit Karma account is straightforward and you can accomplish it in a few simple steps.
- Visit Credit Karma: You’ll need to visit the Credit Karma website and look for the blue “Sign Up Now” link. This will direct you to the sign up page.
- Provide Your Email and Password: The first screen prompts you to provide a valid email address and set a password. You’ll need to confirm it by typing your chosen password again. On this screen, there is also a security question prompt. You will need to click the drop down bar for the choice of questions and then provide the answer to your preferred question.
- Complete the Personal Details Form: The next step is a form with mandatory fields for your full name, address, date of birth and other pertinent details via a multiple choice form. You’ll also need to provide the last four digits of your Social Security Number. After you’re done, click “Submit” and your account is ready for you to use.
Does Using Credit Karma Hurt Your Credit?
Many people are wary about checking their credit reports as they have heard that credit inquiries can hurt their credit. This is only partially true. When a lender performs a hard credit pull or inquiry, it is logged on your credit report and this can have a detrimental impact on your credit score, particularly if you’ve had multiple inquiries within a short space of time.
However, when you request a copy of your credit report, it is not recorded on your credit file. You can check your report and its details without any impact on your score.
Credit Karma works in this way. You can monitor your credit via Credit Karma without it appearing on your credit report, so it won’t affect your credit.
How Often Does Credit Karma Update?
Credit Karma updates its information from TransUnion once a week.
This means that you can log into your account every seven days to see any changes in your credit score. However, there may be occasions when there are no visible updates. This is because it can take up to 30 days for the reports to come in from the financial institutions.
Many lenders only report payment activity once a month, so if you’re checking your report from one week to the next, you may not see any changes. This is quite normal, so you don’t need to worry.
Credit Karma Alternatives
Credit Karma is not unique and there are some alternatives you may want to consider. These include:
This is a multi tiered platform with a basic free service and upgrade subscription levels.
The free membership offers similar credit and account monitoring features, but they only use TransUnion. While you can get a report card with the free version, if you want a copy of your full credit report, you’ll need a paid subscription.
There are some nice ID protection features on Credit Sesame, including identity theft insurance and lost wallet protection, but this varies according to your subscription level.
As the name suggests, this platform uses FICO information, which can be helpful since lots of lenders rely on FICO scores. So, if you want a comprehensive picture of your credit profile, you could use both MyFICO and Credit Karma.
Unfortunately, there is not a free version of MyFICO. There are several tiers of subscription with the least expensive providing alerts, base FICO scores and score monitoring. If you want three bureau credit reports, ID monitoring and updates, you’ll need a top tier plan, which does come at a premium price.
Credit Karma has a comprehensive help section, but if you still need to speak to someone, you can call the helpline or send an email.
This is because Credit Karma uses VantageScores, while Experian uses FICO.
If you find any errors on your TransUnion credit report, you can dispute them directly from the Credit Karma platform. However, if the error is on your Equifax report, you’ll need to contact Equifax.
Credit Karma uses encryption and multi factor authentication to protect your data, so you should feel confident that your information is safe.
Credit Karma earns commission from lenders when you apply for products from the Credit Karma marketplace.
You can delete your account by logging in and then under “My Profile” you should see an option to close your account.