Credit Karma

by Mel
Oct 31, 2021 | 0 Votes | 39 Used | 0 Reviews Your vote
Credit Karma - rate Credit Karma is an American multinational personal finance company renowned for being a free credit and financial management platform. With an estimated 60 million users, the site also features other free financial services such as tax preparation, unclaimed property database monitoring, and more.
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Summary


Credit Karma is an American multinational personal finance company renowned for being a free credit and financial management platform. With an estimated 60 million users, the site also features other free financial services such as tax preparation, unclaimed property database monitoring, and credit report error identification and dispute.

What You Get


Anyone who has a credit card, bought a house, or applied for a loan knows how crucial it is to know your credit score. Lenders and other potential creditors use your credit score-- primarily based on credit reports typically sourced from credit bureaus (or consumer reporting agencies) that collect all your relevant credit data and history—to decide whether they want to do business with you.

So, knowing and monitoring your credit score before applying for a credit card, loan, insurance policy, job, or an apartment will give you an idea of whether you'll be approved or not and save you time, effort, and disappointment. It also gives you the impetus to start measures on how to remedy your credit score so that your chances of getting any kind of credit is improved.

While the three major credit bureaus—Experian, Equifax, and TransUnion—offer free annual credit reports, actual credit scores from them require a fee to obtain. There are, however, companies that offer to give you your credit score for FREE, with Credit Karma arguably being the top free online service in the United States offering monthly credit scores since 2007.

If the concept of free financial analysis services seems too good to be true, it isn’t. In fact, Credit Karma makes its primary revenue from targeted advertisements from partners, therefore offsetting the costs of its free products and services. For example, if you have excellent credit, banks are willing to pay handsomely to target you with their best loans and credit cards because it’s ultimately cheaper for them over running generic ads to millions of people who may never qualify for their products. Credit Karma can then pair your credit score with the companies that typically accept applicants with a similar score, and if you apply to one of those services through Credit Karma, they earn a small commission.

But, rest assured, you don't even have to apply for a credit card to use Credit Karma and its free credit score and credit monitoring perks. Each time members log into Credit Karma, your score from Experian and TransUnion will update and provide you the following data for FREE: 2 Credit Scores and Weekly Reports (from TransUnion and Equifax that are updated weekly and computed using the VantageScore 4.0 model); a Graph showing your credit score over time; Credit Score Comparison to others by age, income and state; a Credit Report Card & Simulator illustrating how certain factors—such as payment history, applying for new credit or loan, and debt utilization—impact your credit score; ongoing Credit Monitoring (for potential fraud); Auto Insurance Score, Credit Karma App, and many more.

Moreover, Credit Karma Tax, is the site’s free tax filing service for federal and state income tax. If you're tired of having to constantly decline your current paid tax programs’ numerous attempts to upsell, or the fact that you can file a federal return for free but have to spend a small fortune to complete your state tax return; Credit Karma Tax can be a good option to consider whether you itemize or have a complex Schedule C, D, or E form to file if you have investment income or self-employment income to report. (Do note that Credit Karma Tax does not participate in the Free File Alliance, and so is not bound by its requirements to restrict eligibility for free filing).

Credit Karma also offers a special Unclaimed Money service applicable in seven states. The product aims to help users find unclaimed money, such as unclaimed refunds and insurance payouts.

In exchange for all of these free services, Credit Karma uses their platform to offer Credit Cards and Loans Recommendations based on your credit scores, odds of approval, and the money they earn for each application. For example, if you return a credit score of 800, you might expect to receive a recommendation for the Blue Cash Everyday Card from American Express, Citi Double Cash, or even Chase Sapphire Preferred.

Credit Karma also offers loan recommendations for the following types: Personal, Home, Auto, Business, and Student. To receive a quote, you will have to enter more personal information including your income, age, and employment information. This can be more convenient than visiting your local bank to make a loan application as well as be a good way to compare interest rates.

Terms


As for concerns about how using their free services may affect your credit score negatively, Credit Karma performs what’s known as a “soft” inquiry on your credit reports, so this will not be reflected on your reports as a credit pull or cause your score to go down in any way.

Becoming a member of Credit Karma is very simple and, unlike other so-called “free credit score” sites, there’s NO CREDIT CARD or any purchase required. Just create an account including your email and password; enter the last 4 numbers of your social security number (required to access your credit bureau information); and verify your identity by answering a few questions.

As soon as your account is created, you will have instant access to free credit scores and reports from your personal Dashboard, from where you can also connect to your online financial accounts and track your spending and figure out where your money is really going. You can also set email alerts to remind you when bills are due.

Ultimately, Credit Karma is using your personal credit/financial data to advertise to you, but it’s not much different than the giant social media apps using your actions to serve ads based on your interests (which the company claims is not shared with third parties). That said, Credit Karma has several safeguards they have in place to protect you and your information, including: a DigiCert EV SSL certificate for the highest level of authentication; 128-bit encryption to protect the information you type in and doesn’t store your SSN (they only ask for the last 4 digits); Read-only functionality and data transmission; and servers that are monitored 24/7, with firewalls in place, plus a site Privacy Policy that is certified by TRUSTe.

One other caveat is that, while their use of VantageScore's system is accurate, it’s not the industry standard and the companies that will approve or deny loan applications are more likely to look at FICO scores.

Trustworthiness


Apart from the issues with targeted ads and their use of VantageScore (where some people have reported on the customer review site ConsumerAffairs.com, that their Credit Karma score is quite a bit higher than their actual FICO score), complaints about Credit Karma are quite few and far between, with the most recent being that the company reached a settlement in 2014 with the Federal Trade Commission over allegations they misrepresented the security of their mobile app and failed to keep customer information private.

This, however, arose primarily from a certificate validation incident wherein Credit Karma disabled SSL certificate validation, putting customers’ private info at risk and not due to any actual fraud occurring. Whether intentional or not, as a result, the company has to submit to independent security assessments every other year through 2034.

Conclusion


As its 60 million members can attest, Credit Karma is a safe, FREE way to check and track your credit score without the need for a credit card, free trial, or any other catches. And while being free means they use VantageScore to compute your rating rather than the FICO gold standard, it gives you a fair approximation—at a weekly rather than yearly interval to boot so that you are always on top of your credit activity and personal finances. At the end of the day, you have nothing really to lose by using Credit Karma to get multiple FREE financial services and helpful insights into your credit health.

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by Mel Oct 31, 2021
Credit Karma is an American multinational personal finance company renowned for being a free credit and financial management platform. With an estimated 60 million users, the site also features other free financial services such as tax preparation, unclaimed property database monitoring, and more.
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