Credit Karma Review 2021
Checking your credit score used to be way more difficult than it needed to be.
Citizens of the United States and Canada are entitled to one free copy of their credit report every 12 months, but you wouldn’t know that if you visited any credit bureau’s website to request one.
Credit bureaus are notorious for touting their monthly paid credit monitoring subscription services right at the top of their homepage and burying the form needed to request your free annual credit report.
That’s where companies like Credit Karma solve this problem. They make it easy to see your credit history, and therefore, your credit score, for free. Credit Karma makes that happen not just once a year but every month, and in exchange, they try to solicit you to sign up for various financial products. Sound like a fair arrangement? Well, let’s dive a little deeper into Wealth Rocket’s review of Credit Karma.
Table of Contents
What is Credit Karma?
At its core, Credit Karma is a web-based service offering a free credit score monitoring service. It also offers application portals directly to credit card issuers, personal loans through Loan Connect, and mortgages through Nesto.
Simultaneously, Credit Karma publishes a smattering of personal finance articles, not unlike this very website. Recent article titles (as of this writing) include “What is the 50/30/20 Rule Budget?” and “Nearly a third of Canadians are Saving During the Pandemic.”
Credit Karma is a subsidiary of Intuit, a financial software company that owns multiple products. Intuit acquired Credit Karma in 2020.
How Does Credit Karma Work?
To use Credit Karma, sign-up for a free account with an e-mail and password and submit personal information like your address, your Social Security Number (SSN) if you’re in the US or your Social Insurance Number (SIN) if you’re in Canada and your phone number for identity verification.
You’ll then have to provide details about what’s on your credit report in a multiple-choice format.
Once that is complete, your credit score and the details of your credit report sync with your Credit Karma account, and you can log in to check your score or the details of your credit report (provided by TransUnion) at any time.
Credit Karma will also send you weekly e-mail updates letting you know when your credit score has gone up or down, and once you get to the site to take a closer look, you will see a chart that tracks the fluctuations of your score from month-to-month for as long as you’ve held a Credit Karma account.
When your credit score goes down, Credit Karma offers basic credit advice such as, “Make sure you keep your credit utilization below 30%.” When it goes up, you’ll get a feel-good e-mail saying, “You did AWESOME this week,” which might be the benign motivation some people need to maintain good debt management habits and pay off their credit card balances.
Armed with your credit score and credit report, Credit Karma also shows you real-time credit card, loan, and mortgage offers tailored to your current credit score. The site can even tell you your chances of being approved based on your score and how many offers for credit cards with interest rates that you’re likely to receive from them.
You can also tailor the credit card offers you receive yourself according to categories such as building credit, rewards, or cutting costs.
Suppose you click on any of these offers, whether they be credit cards, personal loans, or mortgages.
In that case, that’s when Credit Karma makes their money, as they get paid by the credit card issuers, Netso, and Loan Connect when their account holders apply for whatever financial products are on the table for them.
How Much Does Credit Karma Cost?
We must shout it from the rooftops: Credit Karma is free to use.
The only time you may have to pay any money is if you click on an outside link to a credit card, loan, or mortgage application. Even then, you won’t pay any money directly to Credit Karma, but to the credit card issuer, loan provider, or mortgage lender once you are approved, and that’s only in service of any financial product you end up qualifying for, such as an annual fee to a credit card or a loan and mortgage payment.
Account holders do not pay any money for using Credit Karma’s credit monitoring service.
Instead, their credit card, personal loan, and mortgage providing partners pay Credit Karma to advertise these products and for referral links that hopefully shepherd customers, already pre-screened based on creditworthiness, directly into their outstretched arms.
Who Owns Credit Karma?
Credit Karma is one of the many products owned by Intuit.
Intuit is the same financial software company that brought you TurboTax (the tax preparation software), QuickBooks (the accounting software for small businesses), and Mint (the personal budgeting and expenses app that can sync to your bank account).
For Intuit, this is a relatively recent purchase. The company announced it had acquired Credit Karma and it’s more than 100 million members across Canada, the US, and the UK for approximately $7.1B in cash and stock on February 24, 2020.
Our Final Thoughts
When it comes to Credit Karma, the pros far outweigh the cons. In fact, when it comes to cons, it’s difficult to find any that don’t move past the level of marginally annoying. If there are any negatives with this website (and that’s a matter of the user’s personal preference), they are minuscule compared to the benefits.
First of all, allowing users to see and track their credit score and credit report for free, whenever you want, beats dealing with the major credit bureaus Equifax, TransUnion, or Experian.
These bureaus obfuscate your ability to obtain your credit score and credit report for free in favor of getting you to pay for the privilege as part of a subscription.
Always knowing your credit score, including the likelihood of approval for some of Canada’s most popular credit cards, could help you gain control of your finances, increase your ability to apply for loans or mortgages, and grant you the right tools to pay down debt such as credit cards, student loans, or auto loans. On the contrary, you may feel overwhelmed with grants for those same loans, mortgages, and credit cards in this exchange.
This could be a con for those who don’t like marketed to, but it could also be a pro for those who appreciate getting offers tailored to their credit score with increased approval chances.
Of course, you can ignore all of these offers, never clicking on any of them, and strictly using Credit Karma to track your credit, which is a major pro itself.
The only unambiguous finding is that creditkarma.ca doesn’t have as many features or offers as creditkarma.com. If you’re fortunate enough to be American in this case, you will receive offers not just for credit cards, mortgages, and personal loans but for car loans, car insurance, and home insurance.
Plus, Credit Karma in the U.S. allows users to file free tax filing and get their maximum refund guaranteed. They can also search for unclaimed money, monitor their accounts for identity theft signs, and open an app-based savings account called Credit Karma Money.
One can only hope these features come to Credit Karma up north someday soon, but until then, being able to monitor your credit for free without any further obligations beyond being marketed to is beneficial enough.
Frequently Asked Questions
Absolutely. Not only is your account password-protected, but according to Business Insider, Credit Karma uses 128-bit encryption to protect your personal information, employs a full-time data security team, and employs a bug bounty program promising to pay any member of the white hat hacker community who finds a critical bug in their system a $5,000 reward.
Plus, Credit Karma promises never to sell or share your information with third parties without your consent.
Finally, if the worst happens and a data breach compromises Credit Karma, and member information becomes publicized on the dark web, Credit Karma is committed to alerting its members immediately.
Yes. The credit score data is lifted directly from your actual credit report supplied by Transunion, which is a major credit bureau. Credit Karma is at least as accurate as they are.
Still, if you do find a mistake on your report, don’t contact Credit Karma. They import the information without affecting your score itself with a hard inquiry. If you have an issue with your score, contact Transunion directly and file a dispute or challenge request.
Honestly, the jury is still out, and it really comes down to personal preference because these two websites are virtually identical. Both companies provide the same service in credit monitoring, the same advice on how to improve your score and maintain it, and similar offers in a similar way, even if they’re not the exact same financial products.
The only meaningful difference between the two is that Credit Karma gets its information from Transunion, while Borrowell gets its info from Equifax.
This is significant because both credit bureaus calculate credit scores and reports slightly differently, so if you’re a member of both websites, you may find that your credit score on Credit Karma is different from your credit score on Borrowell.
This is nothing to be alarmed about and on average you will get approved for the same products no matter what bureau the lender in question pulls your credit file from.