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Is Credit Karma a Scam?

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Credit KarmaYou know the old maxim – if it sounds too good to be true, it probably is. Does Credit Karma sound too good to be true? You can see your TransUnion credit score for free? You can get absolutely free credit monitoring? These are services that people pay good money for and Credit Karma, a company that isn’t affiliated with any of the credit bureaus, is giving it away for free. It does sound too good to be true.

That begs the question – is Credit Karma a Scam?

Is Credit Karma a Scam?

While you can never say so with 100% certainty, I don’t think they are a scam. I don’t think they are a scam because I understand the business model and you can make more money legitimately than illegitimately, plus they’ve been at it for a long time. While none of these are absolute indicators of them not being a scam, I’d find it difficult to believe that this is an elaborate ruse designed to steal personal information. :)

For more information about their service, here’s my Credit Karma review and video walkthrough.

How does Credit Karma Make Money?

I don’t know for sure but my guess is that they make money when someone signs up for an offer on their site. When you visit the site, you’re frequently shown banking, credit card, and other financial offers that are probably better than whatever you’re using. When I logged in, I was shown an offer for the Citi Platinum Select MasterCard and estimates that I could save $342 over a year. Since I carry no balance, I know that savings estimate is wrong but for someone who does carry a balance, $342 is good savings. If I sign up, Credit Karma may be paid for that.

What About Other Free Credit Scores?

For almost every other free credit score offer, you get your credit score in return for signing up for a credit monitoring membership service. That credit monitoring service comes with a monthly fee after the trial period and the company is betting that you’ll continue with the service, either by choice or because you forget to cancel. They aren’t scams because they tell you this up front but Credit Karma doesn’t sign you up for anything you will eventually pay for.

You will have to make your own determination as to whether Credit Karma is a scam. I’ve been using them for over a year with great results, they’re the cornerstone of my do it yourself identity theft protection system and it’s been working out so far.

{ 430 comments, please add your thoughts now! }

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430 Responses to “Is Credit Karma a Scam?”

  1. Strebkr says:

    I love Credit Karma. It is very useful and I love knowing my score.

    To answer Jim’s question about it being a scam…its hard to be a scam when they NEVER ask for any money. There is nothing to sign up for any try. No monthly fees. Nothing. Its just FREE!

    Try it out!

    • Marty says:

      It can be a scam even if they don’t ask for money duh!

      They require your ssn, date of birth, address, phone…. Need I say more?

    • frankiez says:

      How come they ask for a credit card at the end of the sign up process?

    • Kyle says:

      Wow, Strebkr, you sure sound like a real customer, golly gee. I’ll listen to anything you say. Hey, I bet you don’t even work for the company do you? That’s awesome!!!

      I won’t trust one of these sites until it’s offered by the federal government or TransUnion itself.

  2. I have never considered using Credit Karma, but I appreciate the review. I’ll have to check it out and see what the hype is all about.

  3. Mark says:

    This is a pretty lazy and uninformed article. How can you say you understand their business model when you say “I don’t know for sure but my guess is that they make money when someone signs up for an offer on their site.”

    OF COURSE this is how they make money. That does not make them a scam.

    • Jim says:

      Unless you work there, you can’t be 100% sure of that. You also can’t be sure they make money off every offer. To make that claim, when you don’t have proof, would be irresponsible… which is why I wrote it the way I did.

      Are there any other reasons why this is lazy or uninformed?

      • David M says:

        You are just following the typical “Marketing” that virtually all strories/posts employ to get people to read them.

        I agree that: 1) Credit Karma is NOT a scam, 2) is a good service and 3) how they make money.

        • Sun says:

          Asking a fear question does work. Either people who love the service and want to defend it… or people curious to know about web sites they should potentially avoid. It worked well for me… Its a good tactic. :)

    • Kaylissa says:

      Agreed! One cannot claim to understand the business model and then “guess” about how the enterprise makes money. Either one knows or does not.

      The post would not have lost anything had that comment been omitted. But it does draw questions as written.

  4. cubiclegeoff says:

    I use it and I’m not worried about it. I’ve never read their privacy policy though, and maybe they sell some of the data collected from your information. But after using it for more than a year, I’ve never noticed anything that would bother me (like spam or random offers being mailed to me).

  5. Shirley says:

    I signed up for Credit Karma last year after reading your review. I have been very happy with it and see no problems.

  6. Tuxster says:

    I agree with other commenters that Credit Karma is definitely not a scam, I’ve been with them for a pretty long time and did not see anything that would make me suspect scam.

    One additional correction about your review where you say “I was shown an offer for the Citi Platinum Select MasterCard and estimates that I could save $342 over a year. Since I carry no balance, I know that savings estimate is wrong but for someone who does carry a balance, $342 is good savings.”

    Their system is actually quite smart. You can edit your individual cards, mention the rewards rates, and INDICATE YOU CARRY NO BALANCE. Then, it will only calculate rewards rates (cashback, points, etc.) in the savings total. If you actually spend some time entering your preferences and actual card information, their estimates of how much you can save is very much on spot. It’s the smartest credit card recommender I have seen out there…

  7. Matt K says:

    quick wikipedia search on creditkarma:
    http://en.wikipedia.org/wiki/Credit_Karma#Business_Model

    with links to how they make money as represented on creditkarma’s site:
    http://www.creditkarma.com/about/faq#charge

    whether credit karma got money had you signed up for that one particular link, or credit karma got money just for letting citibank advertise the card is up for debate, but it’s clear that they’re getting paid one way or another for it. And seeing that citibank is an advertiser on your site, Jim, I’d assume you know generally how citibank doles out cash for advertising (usually pay per lead for credit caards).

    • Jim says:

      Yep, there’s a display advertising component and a per approval component; I imagine CK is doing something similar (and everyone else).

      • Sun says:

        Credit Karma has an awesome affiliate lead generation tactic. They provide offers based on your credit score instead of going brute force. If you send qualified leads that have a higher chance of being approved, the credit card companies may give CreditKarma a better payout because their lead generation is so good!

      • SC says:

        Credit Karma pulls in almost 15K per month in ad revenues.

        Put in their url on http://www.freewebsitereport.org/ to see the numbers.

  8. With so many ads on the site I doubt they are a dubious company. Bit with so many attacks on site in the last year (Zappos was the latest not counting Anonymous), we do have to wonder how safe (or not) our information is on the internet. For now, I feel that nothing is safe so I prefer to put my trust into the credit account fraud section… a foolish sense of trust, perhaps.

  9. yourPFpro says:

    We obviously don’t know 100% how they make their money, but it seems fairly obvious to me. You sign up with the site, it looks at your balances, and other info from your credit history, and offers you cards based on that. Whether they get paid per click, or when you sign up is of no importance. Same business model as many blogs use to make money..

  10. Maseca says:

    I doubt that Credit Karma is a scam, but they’re certainly not accurate.

    We recently refinanced our house and bought a car. My credit score on Credit Karma is a full 100-130 LOWER than my score from both the mortgage company and the car dealership. That alone makes Credit Karma essentially useless in my book.

    • Jim says:

      They use a TransUnion score, not the official FICO score, hence the discrepency.

    • David M says:

      Its all about the trend and direction not the actual number.

      I have been using them for 2 years of so and I agree with them when my score goes down – I have applied for a new credit card.

      • Strebkr says:

        I have to agree with David here. While the number itself is a bit off due to it not being your true FICO score, the general direction it follows is correct.

    • amanda says:

      I agree mine and husband are also over 100 lower than what the mortgage people gave us, i had items removed off credit report but yet they still show they are eon there?!

  11. eric says:

    Been using them a long time and don’t have a problem :)

  12. Kelly says:

    I tried to use them, got error messages, emailed them back, they emailed me back with a wrong email address, I emailed them back and told them, then they emailed me back and wanted all kinds of personal information – credit card numbers, SS #, all kinds of stuff. I told them they were full of crap if they thought I was going to “mail” them this information. It was ridiculous.

  13. Kenny says:

    Just signed up…..In addition to knowing that they are just another online business model in the credit arena, they are now offering a Daily and Monthly Monitoring Service for free. Of course, it is for only one bureau but none-the-less, it is for one. It beats paying $200 for a family of 4 through other services (under family plan).

    Also, they seem to avoid sending out email if you do NOT check for special offers. So, you can avoid it in two ways. One through CreditKarma.com site and another through TU by letting them know that you do not want credit card offers. Since I signed up 4 years ago, I have never gotten offers which is great.

    I still signup and cancel credit cards left and right and the score only drops by 10-30 points. Since I have a high score, it does not matter, plus I am done borrowing money. Now, I am into making money through the offers after paying less than $100 to credit card company (in terms of interest in my life), and hoping never to pay any more interest to anyone in the future (all credit card purchases paid off at end of month, and no loans).

    Hope that all of you can do the same now or soon, and Bargaineering teaches us a lot of good aveneues.

    Thanks much for a great blog site.

    Kenny

  14. James says:

    How the scam would work is you have to enter all of your personal information to get your credit report. This is the same information that a person would use to steal your identity. Or have none of you thought about that? It is not about making money, it is about stealing your information!

    • Anonymous says:

      Of course you have to give them all that information, otherwise, how would they be able to check your credit? You have to give that information to get credit. Only makes sense because you could end up with some James Doe information.

    • Traci says:

      And you know this how? They don’t ask for the full social security number…plus they are able to pull your information which means they have something that you don’t have which is ‘access’ to your credit information…they don’t have that unless they are legitmate…have you thought about that???

  15. Dane says:

    their faq says they make money by selling advertisements. that means they’re likely anonymizing their user’s credit scores and selling that information. cookies track you pretty well and build a relatively identifiable persona. credit karma adds credit score information to your persona. advertisers pay credit karma for the extra refining data.

  16. Lorenzo says:

    It’s called credit karma for a reason!

  17. Bonita says:

    I signed up for a Chase Card because CreditKarma said I had a “VERY GOOD CHANCE” of receiving a cc from them…. Not only did Chase deny me, my credit scored dropped almost 80 pts! As they say if it sounds too good to be true…believe it!

    • Chuck says:

      IMHO perhaps you have more going on in your credit history than you revealed here. Ther eis usually a good reason for one’s credit score to drop that much.

    • Sandy says:

      As a person who has worked for banks and mortgage companies pulling credit hundreds of times for people, I can assure you that applying for a card and being denied would NEVER drop your score 80 points. You have either had to had a series of late payments, dozens of inquiries and maxed out your credit lines. I have never seen anyone’s credit drop over one single decline in over 15 years working in the financial industry. If you have a past copy of your credit report and have pulled a new one, compare them side by side and look for any changes.

    • Jim says:

      The first one is just someone complaining about getting offers (which they tell you about) and that the TU score is inaccurate (isn’t that on TransUnion?). And it calls them thugs, without saying why they’re thugs. It’s just another anonymous internet complaint that doesn’t address anything.

      The second is someone who can’t get their account right and setup, which is a legit complaint, but that’s just one experience – is that proof they are stealing data? Doubtful.

      I appreciate you sharing the two links though.

      • Chuck says:

        I woould just reply to your comment. Does it prove they are NOT? I note that you have not given PROOF one way or the other in any of your previous comments.

  18. Tamara says:

    I recently started using CreditKarma after doing research on rebuilding my credit. As a result I took one of the credit offers that was stated that was very likely that I would get and I did get it! Tried to pass my findings to a friend but she was skeptical, but I’m not because I don’t think they are a scam. CK don’t ask you to sign up anything and the CS may be a hit and miss but it definitely provides results! I’m new to CK and I already like what I’ve accomplished through the site.
    And if for some reason you do think they are a scam, you can go to the terms of use and opt out from the site by completing a simple form.

  19. J says:

    I have been using Credit Karma for several years with no problems. The information is free as I haven’t opted for any of the offers they present on their site.

  20. Ronnie says:

    I would bet my paycheck on creditkarma.com. I have been rebuilding my credit for 2yrs and joined ck two weeks ago and just got approved for a capitalone and orchard bank card. My cs on myfico.com two months ago was 574 and ck today has me at 602, petty close to the real thing. So be smart and use ck the right way and you could have a great score and no time
    PS I will only use the capitalone card since it’s 0% apr first yr

  21. Judy says:

    I found creditkarma by mistake. A mistake I have never regreted. I searched the website & can never find anything requesting a payment for their service. I still check it now & then.
    It has helped me get back on track with my debts.

  22. Alma says:

    Credit Karma is BECOMING a scam for those of us who have been on it a long time. It PREVIOUSLY was great, but now Credit Karma has removed most of it’s FREE perks – and now all that’s left is a basic score, and insurance score, which by the way, is much lower than what the lowest of my 3 scores really are.

    So yes, soon Credit Karma will have nothing to offer us, the consumer, except stupid ads that supposedly give you the best deals – which are not the best.

    Probably what will happen then is that Credit Karma will only work for the collection agencies, giving them your current & updated information that we loyal customers continue to give to them, as they take away all their original free perks – and now tell us they are NEW & IMPROVED!!

  23. Marianne says:

    Based on the information above, I am going to give Credit Karma a try. My credit has been ruined during the divorce and inability to keep up with credit card payments, mortgage, etc. But at least I will have some idea how bad it is. I can’t rent a car without a credit card, and no one will give me one at this point. Credit Karma may help put things in perspective for me.

    Thanks to all those who posted reviews and comments.

    I believe Bargaineering just found a new fan!

  24. Jeff says:

    Credit Karma doesn’t seem to add much value and i’m not sure how many hits it took on my credit to find out they couldn’t help me..and contacting customer service is a bit of a joke.


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