Many people use Credit Karma to check their credit score and see if there are any issues. It has over 100 million members in the US. These days, more and more people use free websites and apps to check their credit. This makes us wonder if Credit Karma really gives you accurate and useful information, or if it’s just a way to show you ads.
In this comprehensive review, we’ll take an in-depth look at what Credit Karma offers, how it makes money, whether it’s scores are reliable, and most importantly – is it a smart tool for you to use when tracking and improving your credit.
What Does Credit Karma Offer?
With a free Credit Karma account, you get access to the following key features:
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Free Credit Scores You can view your VantageScore 3.0 credit scores from both TransUnion and Equifax, updated weekly. While not your FICO score it gives a general picture of your credit health.
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Free Credit Reports You can view your full TransUnion and Equifax credit reports, with updates weekly This allows you to monitor changes
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Monitor your credit and get alerts when important things happen, like new credit inquiries, new accounts opened, late payments, and so on. This helps you catch identity theft early.
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Credit Karma gives you pre-qualified offers for credit cards, loans, refinancing, and other financial products based on your credit report.
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Financial Tools: Tools like a credit score simulator, calculators, and comparisons allow you to understand how certain actions may impact your credit score and finances.
The best thing about Credit Karma is that all of these features are completely free. There are no charges or subscription fees.
Is Credit Karma Safe to Use?
When dealing with sensitive financial information, safety and security are major concerns. Here’s an overview of Credit Karma’s security:
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Encryption: Credit Karma uses bank-level 128-bit encryption for data transmission. This protects your personal information.
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Limited Info: You only need to provide the last 4 digits of your SSN to sign up. They claim to not store SSNs permanently.
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No Credit Card Required: You won’t be asked for a credit card number, reducing the risk of unauthorized charges.
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No Data Sharing: Credit Karma states they do not share or sell your personal data without consent.
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Security Standards: Credit Karma meets security standards for the industry and is DigiCert verified.
Based on these safety practices, Credit Karma appears to take security seriously and is considered safe for checking your credit information.
How Accurate Are the Credit Scores?
This is a common question – how accurate are the credit scores provided by Credit Karma? Here are a few key points:
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The scores shown are VantageScore 3.0, not FICO scores that most lenders use.
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The scores can differ from your real FICO scores by a varying amount based on scoring models and credit bureau data.
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The scores are useful for monitoring directional trends in your credit, even if the exact number may differ.
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Checking your score on Credit Karma does not impact your actual credit score.
So while the Credit Karma scores may not be an exact match to your FICO scores, they are still helpful for tracking improvements or declines over time. Just don’t expect the numbers to align perfectly with lenders.
How Does Credit Karma Make Money?
Credit Karma provides all these useful features for free. So how does it make money? Here’s the business model:
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When you check personalized offers and apply for financial products, Credit Karma gets paid by the partner companies.
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They earn commissions when users sign up for credit cards, loans, insurance and other financial services.
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You are not obligated to sign up for any offers. But Credit Karma does heavily market offers to users.
As long as you evaluate each offer carefully before applying, this business model allows Credit Karma to provide free access to your credit information and tools.
Credit Karma Pros
Based on my experience using Credit Karma for over 5 years, here are the main pros:
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100% free: No fees or charges to access scores, reports and tools.
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Useful features: Credit monitoring, simulations, recommendations, etc. provide value.
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Reputable company: Owned by Intuit (TurboTax), so more credibility.
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Strong security: Bank-level encryption and other security measures.
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Helpful insights: Learn what impacts your credit score and how to improve it.
Credit Karma Cons
A balanced Credit Karma review should cover a few potential downsides:
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Just 2 credit bureaus: Only includes TransUnion and Equifax, not Experian.
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Not real FICO scores: The VantageScore models may differ somewhat from your real FICO scores.
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Annoying offers: You’ll see lots of offers for credit cards and loans – some users find this intrusive.
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Limited transactions data: Only includes basic transaction details from linked accounts.
Is Credit Karma Worth Using?
For most people looking to monitor their credit and improve their scores, Credit Karma is definitely worth using. The pros outweigh the cons.
You get free access to credit scores, full reports, monitoring, insights, recommendations, and other useful tools. There are minimal risks, since no credit card is required and security is taken seriously.
The key is using Credit Karma wisely – don’t assume the scores perfectly match your real FICO scores, and avoid applying for financial offers unless they align with your goals. But as a free way to monitor your credit trends and get insights, Credit Karma provides tremendous ongoing value.
The Bottom Line
Credit Karma has become a hugely popular credit monitoring service for good reason – it provides an impressive set of free tools and information to help you understand your credit.
While the VantageScore credit models may not be an exact match with FICO, Credit Karma is still an excellent free resource to track your credit profile trends over time. With strong security and no charges, it’s worth signing up. Just be selective when considering financial product offers.
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Keep in mind that Credit Karma’s offers do not represent the entire universe of financial service companies and products.
As your credit score changes over time, you can take advantage of Credit Karma’s educational tools to learn more about that critical number and how you might be able to improve it. For example, you can see what factors determine your credit score: payment history, credit card use, derogatory remarks, credit age, total accounts, and hard inquiries (a request for your credit report from potential lenders). Each factor is assigned an impact level, so you know which ones weigh more heavily on your score.
Credit Karma also makes your credit report available. The credit report lists all the credit accounts reported to the bureaus in your name, both closed and open. For each active account, you see a detailed overview of your payment history, balance and credit limit, date opened, and account status and type. There are also sections for other things that can affect your credit score, like hard inquiries, collections, and public records, such as bankruptcies and legal judgments.
More tools help you better understand your credit. They include a credit score simulator that shows how your credit score might change based on new activity, like a missed payment or opening a new credit card. Calculators give you advice on paying down your debt faster and calculate the accrual cost of taking out a loan.
(Credit: Credit Karma/PCMag)
Credit Karma offers two bank accounts: a savings account (Credit Karma Money Save) and a checking account (Credit Karma Money Spend) through MVB Bank, Inc., Member FDIC. Should you choose to open them, you fund these accounts through an external bank account, but if you have your paychecks deposited into Money Spend via direct deposit, you could get paid up to two days early. A Visa debit card is included. These accounts have no fees and no minimums.
PCMag isnt in the business of evaluating financial products and has no opinion about whether these bank accounts are worth having.
Credit Karma has another financial product called Credit Builder that can help you build credit while saving money. Its designed for people who need help improving their credit score. To be eligible, you need a TransUnion credit score of 619 or lower and a Credit Karma Money Spend account. Credit Builder shows up as a line of credit on your credit report and serves as a savings plan where your dollars go into a locked savings account that you make contributions to until you reach a $500 savings goal. Your payments are reported to the credit bureaus, and once you reach the $500 threshold, the money is transferred out of the locked savings account and deposited into your Spend account. These services are provided by Credit Karmas banking partner, Cross River Bank, Member FDIC. There are no added fees.
Credit Karma backs up its money management features with a great support system. You can read how-to articles on different topics, chat with an agent, or call (but only if you have a Credit Karma Money account).
The app goes further—it has a relatively new AI-powered personal finance assistant called Intuit Assist that provides personalized recommendations based on your Credit Karma profile and data. It might notice, for example, that your credit score has dropped and offer to help you make better financial decisions.
Sometimes, you converse with an Intuit Assist persona, while other times, you might see a list of FAQs related to the current page. I like this addition, though it didn’t pop in on me very often while I was testing Credit Karma. It’s new, though. I assume the tool will evolve as more users interact with it.
Credit Karma has numerous security features. They include 128-bit or higher encryption, multi-factor authentication (which the PCMag security team recommends you use), and security questions. Like any other good personal finance app, Credit Karma automatically signs you out after a period of inactivity. You can read more about the app’s security practices here.
There’s really no reason not to sign up for Credit Karma. Its free and you get detailed information about your credit. I wouldn’t make it my home for general personal finance management and budgeting, though. That’s best left to our Editors’ Choice winners, Simplifi, which is ideal for most people, Quicken Classic, which is best for power users, and YNAB if youve tried budgeting before and need a fresh approach. Still, Credit Karma is a great place to check your current credit score quickly, learn why it is what it is, and get tips on improving it, all for free. Credit Karma
Best for Credit Score Micromanagers
- Free
- Bill tracking and payment
- Save and spend accounts, Credit Builder
- New Intuit Assist
- Good support options
Cons
- Ubiquitous financial product recommendations
- Minimal transaction details
- No budgeting
Credit Karma helps you understand what goes into your credit score and net worth and how to improve both. Its targeted financial product recommendations can be intrusive, though.
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Credit Karma specializes in helping you see your credit score often and understand all the things that define it.
(Credit: Credit Karma/PCMag)
To use Credit Karma, you must provide your name, address, and a few other personal details, such as your Social Security number, so the app can pull your credit information. Thats the core part of Credit Karma
To get a thorough profile and an estimate of your net worth (and a wider swath of recommendations)—which is optional—you have to give Credit Karma the address of any homes you own and tell it about your vehicles. If you want to import income and expense transactions from your online financial institutions, you need to log in to your banks and financial accounts through Credit Karma and give it access to that data.
Credit Karma isn’t the best app to use if you want detailed information about individual bank and credit card transactions. It only shows the vendor or income source, date, amount, and account. Apps like Monarch Money provide much more because you can see how your spending is lining up with your expectations through tables and charts, though there are no budgeting tools. The app tracks all the elements that comprise your net worth, like property and debts, but there’s no real way to analyze your cash flow, i.e., what you’re taking in versus what you’re spending. NerdWallet is better for that.
Credit Karma does have tools for both tracking and paying bills, however. Once you set up a connection to a biller, you can see your upcoming payments, due dates, amount due, minimum payment amount, current balance, and any recent payments. You can either have the funds withdrawn by the biller through your online connection or you can pay from a Credit Karma spending account (more on Credit Karmas affiliated banking services below). Quicken Classic is the only other app Ive reviewed that supports bill pay.
Credit Karma is owned by Intuit, the same company that owns TurboTax, so it makes sense that theres now a tie-in between the two. A link on the app takes you directly to TurboTax’s opening pages. You can sign into an existing account or create a new one. I wasnt able to test this feature at this time.
(Credit: Credit Karma/PCMag)
Another way Credit Karma helps you monitor your finances is with alerts. You can request notifications via email, in the app, or on your mobile device to tell you about data breaches or identity theft, changes to your accounts or credit report, and information related to your Credit Karma profile.
Credit Karma shows you your credit scores and current net worth front and center when you first log in. But then it immediately starts suggesting financial products. Theyre essentially ads, but some of them have been selected based on your credit profile, so your chances of being approved could be higher. NerdWallet has a similar setup but is not so aggressive. Its homepage has a few links to suggested financial products, but most of them are confined to the Marketplace section.
(Credit: Credit Karma/PCMag)
Credit Karma’s recommendations, like NerdWallet’s, are based on what it knows about you and the financial products themselves. Each offer includes your odds for approval. You can also search for credit cards using filters like rewards and balance transfers. The app posts a lot of information about these products through its own reviews, user reviews, descriptions, and comparisons. Credit Karma contributors, not the issuing companies themselves, provide this editorial content, making for more objective analysis.
Why you SHOULD be using CREDIT KARMA
FAQ
Can Credit Karma help you get a good credit score?
The credit score check is the only thing Credit Karma does that you might use, but it can still be useful for your finances. Credit Karma is a website and app that lets you see your credit score for free. But there’s a lot more to it than that.
Does Credit Karma reflect my credit information?
The credit scores and reports you see on Credit Karma should accurately reflect your credit information as reported by those bureaus. This means a couple of things: The scores we provide are actual credit scores pulled from two of the major consumer credit bureaus, not just estimates of your credit rating.
Does Credit Karma have free access to my credit score?
Remember, when you sign up, one of the key benefits is free access to your credit score. But because Credit Karma uses the VantageScore 3. 0 model, the number you see may not be the same data a lender would use.
Is there a risk to using Credit Karma?
The service doesn’t hurt your credit score because it counts as a self-initiated inquiry, which is a soft credit inquiry.
Is it a good idea to use Credit Karma?
Of course it’s legitimate, millions of users use it to to monitor and improve their credit scores. They give you a full report and alerts about things that might be affecting your credit scores, like opening new accounts or using credit more than usual. Very useful for getting your financial vital signs.
Is Credit Karma a safe site to use?
We’re not a scam. You can rest assured Credit Karma has your back. We’re a personal finance company that wants to help you better understand your financial situation and help you learn ways you can save money. We offer free credit reports, free credit scores, free credit monitoring and identity monitoring.
How far off is Credit Karma from your actual credit score?
How Many Points Off Might Credit Karma Be? The difference between your Credit Karma score and lender-pulled scores typically ranges from a few points to around 20-50 points, though larger variations can occur. The most significant differences usually stem from: Missing information from Experian.