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Credit Karma Review

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Credit KarmaI can’t believe I’ve been using Credit Karma all these months and never wrote up a quick review of the service! I’ve done walkthroughs of their Credit Score Report Card, but never about the entire service. Tsk tsk, what a bad blogger I am.

Credit Karma offers a lot of nice juicy information but the only thing I’m really pumped about is the fact that you get your TransUnion credit score absolutely free. When you sign up, you have to provide a lot of sensitive personal information because it’s needed to pull your credit score from TransUnion. Since the service is free, the only barrier to using it is your comfort level with providing this information to a third party.

Here’s what my dashboard looked like:
Credit Karma Dashboard

There are several reasons why I like Credit Karma:

  • It’s free. When other companies are charging you to look at your own credit score, it’s nice to be able to see it for free. You don’t have to provide a credit card number, there’s no “trial,” and there’s no sneaky catch in there. It’s free and they never ask for a penny. That’s very refreshing.
  • Check as often as you want. Many of the trial services let you check your score once. After that, you need to pay. With Credit Karma, you can check it as often as you’d like. The real limit is once a month because that’s how often various creditors will report data. So you can check daily, but it won’t change unless your report changes.
  • It helps protect against identity theft. Now that the barrier to see your score once a month (or daily if you prefer) has been reduce to $0, it’s possible to use this as part of your do it yourself identity theft protection. If someone opens an account with your credit and the account uses TransUnion to check your score, your score will inexplicably go down. While this doesn’t trump checking your report every year through AnnualCreditReport.com, the fact that it’s free makes it a no brainer for you to check at least once a month, rather than once every twelve.
  • The credit simulator is fun to play with. If you’ve ever been confused about your credit, such as what can hurt or harm it, the credit simulator is a great intuitive way to learn how your actions affect your score. Open a new account? Score falls. Pay off a debt? Score rises.

Here are some reasons why I don’t like it:

  • It’s not a FICO credit score. Credit Karma does not give you a FICO credit score, they give you a TransUnion credit score. TransUnion is one of the three credit bureaus, so it’s a score from a credit bureau; it’s just not one using the FICO credit score equation. If you’re planning on getting a loan, you’ll want a FICO score. If you just want to see what your score is, this score is good enough.
  • It’s a security risk. Giving a third party your sensitive information, even if it is protected and secure, is always a risk. For me, the risk is acceptable but you have to make that determination for yourself. It’s just like the warning I give every time I write about personal finance tools like Mint or Quicken, you take a calculated risk whenever you give your sensitive financial and personal information to at third party. If something happens, ultimately you are responsible.

Overall, I’m very pleased with what they offer. If you’re wondering how they can offer this service for free, it’s because they’re supported by advertising revenue. One thing they have promised never to do is sell your personal information to third parties, which is always one of the concerns whenever you sign up for free services like this. Fortunately they’ve addressed it and put that issue to bed.

I know a lot of Bargaineering readers have signed up for Credit Karma, in part because everyone always gives them a shout in the comments, so I’m curious what you think about the service. If you have any recommendations of what they can or should do, please also share those as well.

{ 153 comments, please add your thoughts now! }

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153 Responses to “Credit Karma Review”

  1. Yana says:

    I checked out Credit Karma because you had mentioned it, and I like it. I haven’t been able to get my free credit reports in awhile, because the credit agencies want a bank statement/information I’m not willing to give to prove my identity. Since Credit Karma is a third party, they can at least get some information for me to view. Yes, I know that’s a bad thing that third parties can get your information much more easily than you can. I don’t mind giving Credit Karma the information they need, because it isn’t nearly as sensitive as what the credit bureaus want from me. I wish Credit Karma provided more services, like the ability to put a freeze on one’s credit bureau files. I took a trial of LifeLock, which didn’t get me my free reports but did put fraud alerts on my reports temporarily. In spite of this, I was shopping and offered a 15% discount for applying for a store credit card. I did not expect to get the credit card and only wanted the discount, but I did get the credit card. I was a bit surprised.

  2. Dan says:

    The TransRisk score that they use is way off. It is over 50 points different than my Transunion FICO. It might be a decent educational tool but I find it useless for real purposes. Also, that simulator is off as well. I simulated what would happen if I paid my bills on time for the next 24 months and my score went down!

    • HERRY says:

      Yes, I absolutely agree with your opinions. Credit karma said my score is 642 whereas my actual I paid today is 713; which is 71 points difference. I’m not going to trust KC anymore.

      • Kim says:

        I found out that it is an average of all three scores.

        • Amy says:

          That isn’t accurate either, because I just had my credit pulled by a lender, and all 3 of my scores are the same, but Credit Karma shows it to be 25 points lower.

  3. I’ve been using Credit Karma for quite some time and love it. I know it’s not the FICO score but it still helps me gauge generally how I’m doing regarding my credit.

    Unfortunately my credit score is not likely to rise too quickly. I paid off all my car loans and only have one credit card with no balance. My mortgage is my only debt which I try to make extra payments on whenever possible. While I know I’m doing fine financially, my Credit Karma score still hovers around 700 and I don’t expect it to skyrocket anytime soon.

    • Jim says:

      I haven’t used Credit Karma yet and am one of those who is paranoid enough about third parties that I probably won’t. But hey, full speed ahead to those who are comfy with it!

      I just wanted to reply to Wise Money Matters because he stirred an issue which has been rattling around my head for a while now. WMM is to be congratulated to the hilt for getting his accounts in order! So why is it that these days when we do this, our credit score actually takes a hit or “hovers”???
      Paying off all credit card debts and car loans should be cause for celebration and not for concern! God help us if we should also pay off our mortgages! How did we get into this insane condition where our financial fates are ruled by credit card companies (banks) and credit scores?

      • Sara P says:

        You are completely correct–the way they calculate credit scores, they actually show absolutely NOTHING about your ability to pay for something. They do not take into account your savings, other assets, spending habits, etc. If you have kept yourself out of debt for a couple of years, you can have a low or nonexistent credit score, even though you are an extremely low credit risk. I have heard the FICO called an “I love debt score,” since all it shows is your ability to take out debt and (eventually) repay it. This stinks royally, but unfortunately we have to deal with it for the time being.

      • mike says:

        I agree Jim. I went through multiple emails and phone calls with Equifax about a similar issue after they reduced my credit score because I paid off (in full) my monthly balance on a credit card (which I do every month) and I made a one time large paydown on my mortagage.

        They penalized me for “demonstrating good credit practices” (a quote in the Equifax literature when you pay off your debts).

        After multiple attempts at communicating, someone finally contacted me by phone who was intelligent and good to talk to. However, they were limited to what they could say as it appears they do not want to commit on specific impacts to your score. The comment was the software generates the score based on many factors and we are not trained in how it works.

        Very frustrating when I could easily compare the current report from the previous report and clearly see there were only two changes (noted above), and these two “good credit practices” caused my score to drop.

        It is unfortunate that we are so impacted by this score and the people who generated it stay at a long’s arm length.

        I am in the process of trying to add a comment to my credit report to reflect this, but that is also becoming a great challenge to accomplish.

        • Bert says:

          Its tragic and a tragedy that our credit score is based on something so meaningless as credit reporting companies that are flawed in how they see our true abilities to conduct our personal business and finance.

          I someone goes through life paying cash for all transactions and is in good standing with all parties they deal with they are penalized.

          If you pay cash for everything then you do not exist and you are or could be harmed by this type of reporting company evaluation of your true credit worthiness if you ever choose to take out a real loan that is above the grossly inadequate system in place.

          Since these reporting agencies conduct their business in this way I see a great opportunity for a class action lawsuit against these so called credit reporting companies for the harm they cause the people that use our nations legal currency to pay for debts or pay as you go through life.

          If these companies don’t allow for reasonable corrections to be made to a persons credit worthiness then a crime has been or is continually being committed by these companies and damage may be owed to all parties that have been harmed by these credit reporting companies for providing knowingly false, inaccurate and incomplete information that could destroy people and cause great damage to all people They have faulty. Or wrong and incomplete information on.

          If a person is branded with a low credit score that is incorrect then this person should be provided with an easy access way to establish a correct credit rating that will not destroy people or companies looking for loans.

          Your credit rating from these companies also can impact the prices you get when they use your credit score to determine the price they will charge you.

          Most Insurance Companies use your credit score to determine your insurance price sand the amount you will be charged.

          I have never seen a system such as thus one that deserves to be sued more than these credit reporting companies that can make or break you simply by giving you a poor, low or inaccurate credit score.

          I would be one of the first to sign on for any class action lawsuit that would take on these credit reporting companies that destroy people, families and businesses every day based on a number score they give you.

          These companies make it very hard to make corrections or to get a justified credit score number unless you are a slave to their system.

          Since I pay for most of my acquisitions or purchases by paying for it in cash or check I am a great example of someone that could be harmed or hurt by these companies because of them giving out inaccurate credit scores they base on little or no information.

          Watch for what they ask for the next time you get an insurance quote. They will insist on doing a credit check on you. They say it won’t affect your credit if they look you up based on your credit but they won’t guarantee it won’t harm your credit score. This is a Large Flag and they should not be allowed to require access to your credit score before they give you an insurance rate.

          If I ever come across a class action against these credit scoring companies I will be the first to sign up.

          Credit reporting companies as they are used today should be outlawed. Not long ago it was illegal for insurance companies to require your credit information but a few polititions must have gotten the required donation. So they changed the law for certain companies.

          Its time we fight back and take back our rights.

          Yes, Its Big Brother giving away all of our rights and when we are not looking they take everything else they can.

          Every time I have checked my credit I have found errors made by these credit reporting companies. Its time they pay for the damage they do to us all.

          We are all at great risk with these companies doing what ever they want with the numbers.

          I hope you have Good Luck the next time they spin the wheel on your future and your credit score.

          666

  4. StephaniePTY says:

    Credit Karma is good enough for me, since I don’t need my “real” score for anything right now. I’m about to rent an apartment, so while it might be a good time for me to get my “real” FICO, I’m not sure what help it would do. I already check my credit reports three times a year, and my Credit Karma score every month, so I’m not sure what I would see in getting my FICO score that would help me in the event my new landlord does a credit check. If I was going after a car loan or a mortgage, maybe…

    • Jim says:

      I don’t think you need to get a “real” FICO score just to rent an apartment, you already do enough to ensure your credit is good. Getting a real FICO would probably be a waste of your time.

  5. MLR says:

    I got my real FICO score to compare it to Credit Karma. They were within 10 points.

    Works for me! :)

    Great service to share with your readers, Jim!

  6. qixx says:

    I have been using Credit Karma for about 2 months. When i started using it i had gotten my FICO score a week earlier. Credit Karma shows my TransUnion score as being about 10 points lower than my FICO score. That is close enough for me. Looking at the Report Card feature shows me the areas that i can improve on (any that are not an A).

  7. Jon says:

    So, what’s a good score on Credit Karma?

  8. Matt Jabs says:

    Does it affect your credit score negatively when you “update your score” on Credit Karma?

    Wondering because of the prompt you receive when updating…

    • Dan says:

      Nope, none of these consumer services do. They are soft pulls that do not effect the score at all and are not visible to creditors. The prompt is permission so that CreditKarma is allowed to go out and get sensitive information from Transunion.

      • mlk2 says:

        No, your score won’t be affected, but please understand that you are authorizing a THIRD PARTY to access your credit score.

        In that Karma Credit works very diligently to HIDE who they are (they were presented to me as a service by Sears under the guise of searscreditscore.com…and NO WHERE did they mention that a third party was accessing my credit info) I would give Karma Credit a D MINUS in service.

  9. Flexo says:

    I like CreditKarma, even more now that they’re using a real credit score rather than an estimation (even if it isn’t FICO). I check every few weeks, and even used it to see the effect of adding a applying for and accepting a new credit card — my score dropped by one point.

    • Dan says:

      There is a danger in using a score that really isn’t used by any lenders and I think you described it right there. Dropping just a point for an inquiry and a new account? I have NEVER heard of that with FICO. It should drop a lot more.

      So now a consumer like yourself walks away and can easily think, wow, I should apply for new cards all the time. Just a 1 point hit?

      I just have experienced a lot of crazy volatility with this score. For example, it does not properly take into account no-preset spending cards so your score drops and that report card says your maxed out when you really are not. (it was simply the score looking at your high balance as your credit limit instead of looking to see it was an “OPEN” card and that it should not be used in utilization) which my FICO score properly deduced.

      Then I have had instances where my score is higher that friends who have longer histories, with better characteristics, according to FICO!

      Then there was the time I looked at my “Credit Snapshot” and it stated I should pay my bills on time more often, when I never paid my bills late ever!

      Granted, Transunion is probably feeding this information to CreditKarma, my point just is that there is a danger that this product can cause more confusion when it’s not using a stable and commonly used score. It’s a great offering I just don’t trust the score.

  10. Damon Day says:

    If you ask me the entire fico thing is a bit of a sham. Here you have this private company with some secret formula basically wielding an enormous amount of power over everyone. At least the credit formula for arriving at your score should be simple and straight forward.

    I don’t agree with the concept of an arbitrary score in the first place. You should have just a credit report. If you want a loan, an actual human being should look at your report and decide based on your actual history, ie facts, whether or not they feel you are a good credit risk. A score is just a way for them to say, oh, I am sorry because your score is only 680 you don’t get the good rate.

    With this scoring system, you can pay all of your bills on time, never have an issue and still not have a very good score. What if you are moving along fine, and then one day, your credit cards drop your credit limit to your balance that you owe. Happening to people all over the country for no other reason than the creditor is contracting lines of credit. All of the sudden you can go from 750 down to 650 and it is something that you have no control over.

    If there was no “Score” well then you would have to have an actual human (remember when corporations had Humans do things)look at your report, and they might have a question. Everything looks real good except please explain why you maxed out all of your credit cards. Oh, I didn’t I actually carried fairly small balances on them but last month a few of my creditors lowered my credit limit because of the financial crisis. Oh, ok that makes sense, here is your loan.

    This entire secret score thing is bogus.

    Just my two cents, anyone else agree?

    • Anonymous says:

      I agree – well said

    • Pam says:

      Perfectly said!! Well done.

    • kalo says:

      Your reasoning is ok, but when you think about it, that human that is looking at all of these reports will likely have a system to relate one report to the other. Even if that system is in the human mind, it is very similar to what a credit score is. The credit score just applies all those things that that human would be doing in a more efficient manner.

  11. eric says:

    Works for my purposes :D

  12. Duke says:

    Checked my score on Credit Karma is says 695. Purchased my TransUnion FICO score and it is 771. A big difference in the score. Thank goodness the FICO score is the real deal. I do like using Credit Karma. An increase in the CK score will lead me to assume my TU FICO score has rose without purchasing it. Maybe the CK score is just playing catchup if it increases.

    • mlk2 says:

      This is the trap. Same thing here….I signed up for this “service” (used loosely) only to find the score is bogus.

      But signing up for this service can adversely affect your credit if you fall for one of their guises. I signed up for this so called service through my Sears credit card (www.searscreditscore.com). This so called service said I had a “credit rating” of 675 (but they wouldn’t verify where that credit rating came from and when I actually checked with the credit reporting bureaus they all reported my FICO/Vantage score at at least 100 points higher).

      However, as a result of signing up for this service, my Sears credit line was dropped from $5200 to $900..all based on a number that has nothing to do with actual credit…and while I really don’t care what my credit line with Sears (who really uses a Sears card for credit) it does affect my line of credit.

      Bye bye Sears card…bye bye Karma Credit.

      • Anonymous says:

        It is a free service. It isn’t a magic wand. People be advised, credit karma will give you guidance and an estimation of your credit, for me it was only off 2 points, but do not put too much weight on to what credit karma says your score is. Use it as a tool but don’t get upset if the score is not accurate. No one should be relying to heavily on a free service like this.

  13. Mark says:

    The score CreditKarma gave me was 747. My real score from all three credit agencies is 801/807/797. So they are way off, but maybe that happens at the higherend of the scale.

    • Christy says:

      I think that is probably true. My credit card utilization says 0%, which is a C, when it is really 1-20%, which is an A, so my credit score should actually be higher according to them. I’m too cheap to pay for a real one without a good reason, so I have nothing to compare it to right now.

      • Jim says:

        If you don’t have a good reason to know your actual score, I think this is good enough. No sense paying for something you don’t need, right?

    • linda says:

      My experience is just the opposite. Karma is about 80 points HIGHER than the 3. Not even close to an average of the 3 either. I have been working hard to improve my credit and seem to be treading water for the last 3 years.

  14. Iras says:

    I feel that I was tricked by free credit report to try a free service that they later charged to my credit card I will cancel my credit card for this reason and I will never trust your organization again .Trickery is the name of the game and your credit services are just like all the other money making scams to trick unsuspecting consumers out of their hard earned money no shortage of takers in this area. I hope God blesses people who exploit poor Americans out of their nickels and dimes with long life long enough for someone to nickel and dime them ,P.S. keep the 31.00 dollars apparently FREE CREDIT REPORT.COM needed it more than my children and I. sencerly il grayson TX

    • Sally says:

      1) Nobody who knows their rear from a hole in the ground thinks freecreditreport.com is actually free. Why?
      a)It’s on TV and says “free” over and over and
      over. There’s your first clue. Real “free”
      things don’t require arm twisting and
      repetitive jingles to get their point across.
      b)It’s run by Experian and Experian is
      comprised wholly by soulless bastards.

      2)This article is for something completely different, with nary a TV jingle repeating “free” over and over again.

      3)As far as I’ve seen, this site has never pimped freecreditreport.com without warning you that there’s a fee attached if you don’t cancel during the free trial.

      4)READ when you agree to things ESPECIALLY on the Internet. Good God, man.

      • mlk2 says:

        Your 4th point is positively the most important, and one to be considered. But you have to wade through pages of fine print (at 4 point font) to really understand what you are getting in bed with when you sign up with Karma Credit.

        By signing up with Karma Credit either via their web site or from one of their non-disclosed “partners” (Sears is one) you are allowing a third party to access your credit score. On many of their web sites they do not identify themselves but instead hide their identify via reputable sounding sites (for me it was searscreditscore.com, which actually had NOTHING to do with Sears…something I learned after reading the fine print)..

        I learned my lesson. I signed up through my Sears credit card. I canceled as soon as I learned the extent of how my credit would be shared and have since filed complaints with the BBB, the FTC and the California Attorney General’s Office.

        Free is never free….

      • mzanders says:

        Sally – Awesome comment. Pretty much hit the nail on the head on all four points.

  15. Glenn R. says:

    I like the answer that says that Experian is a bunch of “bastards”– amen

  16. Marcos says:

    I would have to say that considering that all the scores listed have been HIGHER than CK, that what ever you get from Ck is lower than the real FICO. So if you are in the high 7′s who cares if it’s off by 10 or 90….your still over 760! Close but under is good news to me.

  17. Jeffery says:

    I am still not sure how much stock I put in my Credit Karma score. It says that I have a 727, but I am also a member of Equifax Score Watch and they are reporting my score as a 640. It also shows that I have $0 credit card balances but in reality I owe about $1000 to a furniture store which is a revolving account. Any ideas about why these differences are so drastic?

    • Gabe says:

      More than likely your account was not published to transunion. Same if you have bad debt, not all lenders send information to all three companies.

  18. kenny says:

    they say they will not sell it to a third party but what will stop them from just giving them the information for free

    • mlk2 says:

      Nothing…in signing up with Karma Credit you agree to allow them to offer you services from “partners” (unless you uncheck the box).

  19. mlk2 says:

    FWIW, ABC Denver Channel 7 television (www.thedenverchannelcom) did a story on Karma Credit in April that they said they have subsequently “pulled” from their web archives because of questions about the integrity of this organization.

  20. Kevin says:

    After reading the comments above, I decided not to check my credit score from credit karma as some people reported their real FICO scores are way off from the scores they got from credit karma. I had similar experience from quizzle which said my score was 701 but in fact my FICO score was 785. This makes me conclude all these sites who give free credit score are not really reliable.

  21. LAG says:

    Credit Karma can’t be right at all. We lost a home and now have extremely high credit card debt. Most of the cards are in my name since I do all of the finances in our house. Credit Karma says my score is 731. Yeah, right.

  22. cdiver says:

    So does Credit Karma not pull your actual score from Trans Union or do they do a soft pull against your data and generate their own score?

  23. Anonymous says:

    I tried the service but noticed that my Credit Karma’s score was way off by about 100+ points.

    There’s also only one way to reach Customer Service which is by email. The problem with that is that apparently it takes them up to two days to respond back to you (if ever).

    This is the year 2010. I don’t understand companies who only provide email support as an inferior replacement for phone support. Don’t get me wrong — there are alot of companies who do email support well, but Credit Karma is not one of them.

  24. Anonymous says:

    There is no “actual score” from anyone any more. The three major credit reporting agencies (Trans Union, Experian, Equifax) have actually gotten together to formulate VantageScore. They want to corner the market, so they pushed FICO (your only REAL score – the one used by creditors) out of the picture. The suit is still pending.

    You can’t even get your real score from Experian any more. They FORCE you to get (read: pay for) your useless VantageScore. Lenders DO NOT use VantageScore. They use FICO. If you don’t believe me, call your creditors yourselves.

    CreditKarma is a scam and waste of money. You’re not getting anything close to what your creditors see.

    • Bucksinnc says:

      CreditKarma is certainly NOT a scam. A scam requires some hidden agenda on their end and in this case, there isn’t one.

      Sure there are offers on the website for auto loans, CCs, etc., but you are NEVER forced to click them. Advertising is how the website survives, so it’s obviously to be expected.

      I saw an online poll a few months back when I first joined CreditKarma, it had a couple hundred responses and the majority said the score they were given was within 20 points of their actual scores, which is very respectable for a completely free service. Sure, some scores will be way off, but the main purpose of the site is to help you watch your credit FOR FREE and to give you advice on how you can improve it. It is not there to give you a 100% accurate score (which they plainly point out when you join).

    • HERRY says:

      I like the phrase “CreditKarma is a scam and waste of money. You’re not getting anything close to what your creditors see.” Credit Karma said mr score is 642 , but when I check with Transunion by paying , it is 672.

  25. Phil says:

    CreditKarma is a joke ist said my score is a 633. Whent i pulled my real fico score is was 721 almost 100 point difference. Creditkarma said my credit was poor. When it really is good. I dont where the get thier info from but it is sur unreiable.

    • FIcovsbureaus says:

      The scores from the bureaus are often very different from the FICO score. Karma isn’t able to provide the FICO score because it is too costly.


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