Credit Karma Review for 2021

Credit

Whether you’re working on repairing your credit or simply want to find out where yours stands, there are plenty of websites available that claim to offer free credit scores.

Credit Karma

Credit Karma offers its members free credit score updates, monitoring services, and personalized advice on how to improve your credit score. It’s currently one of the most popular “free credit score” sites on the Internet.

So how does it stack up to other sites? And is the information truly reliable? We dug deep to find out exactly what they bring to the table and whether it’s worth taking the time to sign up. Read on for our full Credit Karma review.

How does Credit Karma work?

Unlike other sites, you never have to enter your credit card information, so you don’t have to worry about hidden charges, fees, or trial periods that end suddenly.

How does Credit Karma make money?

Credit Karma makes money by offering promotions and financial services to its members from partner companies.

For example, if you apply for one of the “personalized credit card offers” using their link, they’ll get a kickback from that credit card company. While you can easily opt-out of emails at signup, you’ll still get offers when you visit the website.

Some of the recommended credit cards Credit Karma offers include:

  • Balance transfer credit cards
  • Cashback credit cards
  • 0% and low-interest credit cards
  • Rewards credit cards
  • Travel credit cards
  • Hotel credit cards

Each credit card recommended on their list of “best credit cards” is based on your credit profile.

Is Credit Karma safe?

Credit Karma prides themselves on keeping your personal information safe, and part of their success in doing so is that they don’t request that much.

As mentioned above, they don’t ask for a credit card number and you only have to enter the last four digits of your social security number to get started. Even that information isn’t stored permanently, so there’s no risk of someone hacking in and stealing part of your social security number.

Additionally, Credit Karma doesn’t sell or rent your information to any third parties. This includes both your contact information and your credit information. Your information is safe on the website because they use encryption services to protect online users.

Credit Karma Complaints

Credit Karma’s BBB rating is currently a B+ which is partially due to the 330+ complaints filed within the last three years. However, with more than 50 million members, that’s quite a drop in the bucket, and the company resolved all complaints.

The Better Business Bureau also cites a slow response time to complaints as part of the reason behind their rating. Still, a B+ is an improvement over the last couple of years. It demonstrates that they’re taking clear steps to improve their customer service.

The FTC sued credit Karma in 2014 for security risks in its mobile app, but those issues have since been addressed.

What You Get with a Credit Karma Account

Once you’re ready to open an account, what benefits do you receive?

The website primarily centers around breaking down your credit information and analyzing the information to help you make financial decisions and gauge what areas might need attention. One of the most appealing features for many users is access to their free credit score.

Here’s everything you’ll get with your membership:

  • VantageScore 3.0
  • TransUnion credit report, credit score, auto insurance score
  • Equifax credit report and credit score
  • Free credit monitoring
  • Credit report card to help identify weak areas in your credit report
  • Credit score simulator shows how certain actions could potentially raise or lower your credit score

All of this information is displayed in easy-to-use dashboards. You can look at what factors impact your credit score. Credit Karma breaks down each weighted category in the scoring system to show how you rate in each one.

This helps you know what areas of your finances you should focus on to improve your credit score. If you noticed any errors or possible signs of identity theft on your credit report, you can take action by disputing them with the major credit bureaus.

Credit Karma dashboard

For example, you might have an “excellent” rating under your credit utilization, but only score a “fair” for payment history. So you know that your best potential for future growth lies in making regular, on-time payments for your bills each month.

You can also click each category to go into further detail about how different ratios are calculated and what statistics have changed since last month. They also show you how you compare to other Credit Karma users with similar demographics as your own.

It’s quite an in-depth breakdown of all the factors that go into your credit score. This can be very helpful if you’d like a full analysis of what you need to do to help improve your credit score.

New Features from Credit Karma

Credit Karma has recently rolled out a few extra features to offer members. The first is called Unclaimed Money. You can perform a free search to see if you qualify. When companies owe you money but can’t reach you, for example, they’re required to turn that money over to the state.

Credit Karma members can search a free database to see if they have any outstanding money to claim from the government.

The second new member feature is a free tax return service. It’s similar to Turbo Tax and H&R Block’s software services, with a maximum refund guarantee. Plus, both the federal and state returns are free to file, as are additional forms you may need.

See also: Top 5 Credit Monitoring Services of 2021

Is Credit Karma free?

It’s true that Credit Karma is completely free and the company claims that they will remain so indefinitely. That’s great news for users, but it’s still important to be cautious when browsing the website.

It might be tempting to take out a loan or get a new credit card that you might not otherwise consider when you see all the various financing offers available to you.

Perhaps that is a good thing for some people; after all, everyone needs some sort of financing at some point in their lives. Or maybe your credit has improved and you are eligible to refinance a current loan at a better interest rate and save some serious cash.

Why is Credit Karma free?

One minor complaint from some users is that the user dashboard has many ads and offers from third parties — maybe too many for some.

Of course, these ads and offers are how they make money and can provide members with a totally free credit score. However, you shouldn’t take out a credit card or loan that you don’t need just because you’re being offered what seems like a good deal.

Because Credit Karma has access to so much of your personal and financial information, they are able to make extremely targeted individualized offers to each member.

Be sure to use your judgment wisely before committing to any product you’re offered. But hopefully, if you’re using Credit Karma, you’re already determined to use your credit responsibly so you can achieve all of your financial goals.

How accurate is Credit Karma?

The free credit score you receive from Credit Karma comes straight from TransUnion and Equifax, two of the three credit bureaus. It is not your FICO score, the scoring model used by the vast majority of lenders. In the credit industry, these credit scores are referred to as “FAKOs.”

If you’re interested in getting your real FICO scores for free, check out our article, 13 Credit Cards Offering Free Credit Scores. Some of the credit card companies don’t even require you to be a customer.

VantageScore

While VantageScore 3.0 was actually created by all three major credit bureaus, it’s still not as popular as the FICO model. When it comes time to apply for a loan, your FICO score may be quite different from the free credit score you’ve been tracking through Credit Karma.

There’s no way to tell how big the difference may be; in fact, member reports vary in all different directions. Some users claim that their credit scores from Credit Karma are much lower than their FICOs. It leads them to wonder if the website purposefully reports lower credit scores to keep customers coming back.

Other people are disappointed when they find out that their FICO score is lower and that they don’t qualify for as competitive interest rates as they had hoped for.

Still, others say that their FICO and Credit Karma credit scores had negligible differences. It seems like personal experiences can vary widely, so it’s best to take your personal information with a grain of salt.

Does Credit Karma hurt your credit score?

Many people ask if getting your credit score from Credit Karma will damage your credit. The answer is no. Viewing your credit history or free credit score at CreditKarma.com does not affect your credit at all.

Bottom Line

Using their service to track and analyze your free credit score can be a big help when you’re in the process of looking for a loan. Just remember that when you are shopping for a loan, you should always talk to several lenders and compare offers before choosing one.

If you’re unsure of how accurate your Credit Karma credit score is compared to the number your lender will pull, wait until you are ready to actually take the loan out. That way, you can batch all of your credit inquiries together and find out your credit score during the application process.

By doing so, you won’t risk hurting your credit score with multiple hard pulls on your credit reports from different lenders. Even if most lenders use a FICO score instead of the VantageScore 3.0 provided by Credit Karma, they still offer a useful service.

So does Credit Karma prepare you for the loan application process? Yes, they provide a free credit score that comes directly from the information (and formulas) furnished by the three credit bureaus.

If you’re looking for a free, reliable credit monitoring service, Credit Karma provides real-time updates and personalized advice to help you raise your credit score.

But nothing is an exact science and you can’t rely solely on Credit Karma’s credit scores to determine how likely you are to get approved for a loan. However, more information is always better than none, especially when it’s free.

Lauren Ward
Meet the author

Lauren is a Crediful writer whose aim is to give readers the financial tools they need to reach their own goals in life. She has written on personal finance issues for over six years and holds a Bachelor's degree in Japanese from Georgetown University.