Do Yourself a Favor and Sign Up for CreditKarma
I’m really not the guy who goes around telling people they have to check this out, but recently I have found myself begging my friends to check out CreditKarma.com. Credit Karma has singlehandedly given me the tools necessary to monitor and build my credit, and it's a tool everybody should be utilizing. But, it seems my word is not enough. Everyone wants to know: is it free? Well, how do they make money then? Is it a scam?
I’ll answers those questions for you and highlight some of the free services that Credit Karma provides.
Is Credit Karma Free?
Yes! Credit Karma is 100% free. I have been using Credit Karma since
2009 and have never been charged a penny. Most credit monitoring sites,
which oddly enough includes the major credit bureaus themselves, ask you
for a credit card when you sign up. Generally, the first month is free
and then, just when it’s off your radar, you are unsuspectingly charged
because you have not cancelled your subscription. That is why you were
asked for your credit card info at sign up.
Credit Karma is different. You are never asked for credit card or bank information. In fact, when you sign up for Credit Karma, you are only asked for your email, name, DOB, social security number and your annual income. How Credit Karma is able to compile all your credit reports and important information from these few bits of information is beyond me, but it’s a beautiful thing.
Well, Then How Does Credit Karma Make Money?
Credit Karma makes money through “Recommendations”, which I should warn you, are not always the best recommendations and should be looked at carefully. What Credit Karma does is suggest various credit cards, loan consolidations, and loan offers from third party advertisers. When a Credit Karma user signs up for one of these offers, Credit Karma is paid a commission. This is clearly laid out in CK’s Advertiser Disclosure where they add, “It is this compensation that enables Credit Karma to provide you with services like free access to your credit scores and free monitoring of your credit and financial accounts at no charge.”
Is Credit Karma a Scam?
In a word, no. On Credit Karma you are never asked to give payment information and therefore there is no way for you to be charged. It’s tough to scam someone when you don’t get any money from them. Yes, you are asked to provide your social security number to Credit Karma, but there is really no getting around that. A person’s social is what the bureaus use to track credit and the only way a credit monitoring site would be able to access info from the bureaus. If you’re worried that this site is one ginormous identity theft scheme, don’t be. Credit Karma has over 35 Million members and recently received $175 million in funding. I don’t believe that either of those things would be possible if they were compromising sensitive data.
What You Get From Credit Karma
TransUnion and Equifax Credit Scores:
Every week you will receive updated reports of your credit score from
the two major credit bureaus. This weekly update allows you to make
sure you are staying on top of your payments and becomes rather
addicting to watch as your score begins to improve.
Credit Report Card
Your report card gives you a grade on the various factors that combine to make up your credit score: credit utilization rate, payment history, age of accounts, derogatory remarks, total accounts, and credit inquiries. This tool really helps in identifying what you are doing right, what you are doing wrong, and what you need to focus on to pump up your credit score.
Credit Score Simulator
Definitely my favorite Credit Karma feature, the credit score simulator allows you to simulate different actions like opening a credit card, closing a credit card, increasing or decreasing balances, etc. and how they would impact your credit score. This tool is unbelievably helpful in making small decisions that greatly benefit your credit.
Other features include My Spending that tracks your spending, auto and home insurance scores, and community help.