Credit Karma Review
Ever since I first brought up Credit Karma in my 10 free financial services post a while back, I’ve had a ton of curious friends and readers ask me more about them.
– Have you used their service?
– Is it REALLY free to get your credit score?
– Is Credit Karma safe?
– Is Credit Karma a scam?
I had all of those questions myself. So what follows is a Credit Karma review that hopefully answers these questions about the service and whether or not I’d recommend you use it.
Is Credit Karma Free?
Yes. This was a big question that I had going in. You’ll notice with most “free credit score” companies, when you sign up for their service, they ask for your credit card. And then, a month later, you’ll unsuspectingly get charged. After going back to read the fine print, you’ll notice that free was really only free for the first month, and if you didn’t cancel your subscription, you’ll get a monthly charge. That’s why they asked for your credit card.
Not at Credit Karma. They don’t even ask for your credit card. There’s really no way to get screwed on unsuspecting charges with them.
How Does Credit Karma Make Money?
You’re probably wondering how Credit Karma makes money if they don’t charge you for their service. It’s a legit question to ask. From everything I’ve seen, they have almost an identical business model to Mint.com. If you’ve signed up for Mint’s service, you’ll periodically get Mint partner offers that could potentially save you money. It’s a form of advertising. Credit Karma has the exact same model – ad-based offers from partners.
You can elect whether or not you actually want to receive these offers right on the sign-up page under communication preferences. I appreciate the transparency and that I didn’t have to find some secret unsubscribe link hidden deep in the site somewhere.
Is Credit Karma a Scam?
I was wondering whether Credit Karma was a scam and whether or whether your privacy is truly protected. After researching and using them myself, I can tell you Credit Karma is definitely not a scam. I did a little research before signing up. Credit Karma is a TRUSTe Certified company. They are also a BBB (Better Business Bureau) Accredited company.
I looked into Credit Karma’s BBB accreditation, and they have an ‘A’ rating, on a scale of A+ to F. Only 8 complaints have been filed in the companies 4-year history, and they were all resolved. If people have been screwed by the service or their information was stolen, you’d think there would be a red flag somewhere.
One noteworthy item with Credit Karma is that you have to give them your social security number. This is how all credit is tracked, after all. You have to supply your SS# with all the credit bureaus, all other credit score sites out there, and any time you apply for credit. Credit Karma addresses this concern in their FAQ’s by stating:
“In order to retrieve your first credit score, we must use your social security number. We only use your SSN for this first score retrieval, and we do not store it in our database. After this one-time use, we will not need your SSN again and it will not be stored on any of our systems.”
That is reassuring.
Additionally, power in numbers is reassuring as well. Credit Karma surpassed 35 million members in January of 2015.
What do you Get from Credit Karma?
Here’s a rundown of all the free stuff you get in your Credit Karma account:
TransUnion Credit Score: It is continuously updated so you can see how it changes as you make a change that will impact your credit score. And it charts out over time, as seen in my screen shot above. You can also see how that score compares nationally, and you get an overall grade.
Equifax Credit Score: In January of 2015, Credit Karma started offering Equifax credit scores, in addition to TransUnion credit scores. That makes for 2 out of the 3 major credit bureaus.
TransUnion Auto Insurance Score: Many insurers are now factoring in an auto insurance score, which is based on your credit history. This lets you know how you stack up against others.
TransUnion Home Insurance Score: similar to your auto insurance score, but used for home insurance.
Your VantageScore: This is a cumulative, consistent score across all three credit bureaus.
Credit Report Card: This is definitely a nice feature. You get to see a grade on each of the factors that go into making up your credit report: credit utilization rate, payment history, age of accounts, derogatory remarks, total accounts, and credit inquiries. Good stuff to know if you are looking to improve your credit score.
Credit Score Simulator: This is probably the most useful feature on Credit Karma. You get to simulate how taking certain actions (i.e. closing a credit card, opening a new one, increasing your credit line, etc.) would likely impact your score. I was surprised to see how little of an impact opening or closing a credit card account would have. Definitely good to know.
Free Credit Monitoring: Credit Karma has now even started offering free credit monitoring in addition to their other free services.
TransUnion Credit Report: As of August, 2014, Credit Karma now has free credit report access too! Access is to your complete TransUnion credit report and you can check it any time (it updates weekly). This gives you more consistent access to credit reporting throughout the year (versus just once via annualcreditreport.com), allowing you to frequently monitor your credit report and correct any errors or discrepancies.
Equifax Credit Report: TransUnion credit reports were added in late 2014, and shortly afterward (January, 2015), free Equifax credit reports were added as well!
Final Thoughts on Credit Karma
The only downside that I’ve found with Credit Karma is that there are a lot of offers in the interface when you log in to your account. It’s a minor annoyance, but this is how Credit Karma makes money, so I’ll take that trade-off vs. having to pay for the service.
All-in-all, it is a super useful service that I feel really good about. You’re basically getting for free what many other services are charging $15 or more per month for. And having used TransUnion’s credit score reporting service in the past, the nice graphical interfaces, report card, and Simulator tool make Credit Karma much more useful. I highly recommended their service.
Have you used Credit Karma? What’s your take?