Credit Karma

Credit KarmaCredit Karma is a San Francisco company that provides free credit scores to consumers, based on the TransRisk credit score generated from the national credit bureau TransUnion.

Funded on March 2008, the company states that “We believe free access to one’s credit score and report is a fundamental consumer right. That is why our site allows consumers to access their credit score anytime they want for free without the sneaky ‘free’ trials or subscription requirements“.

In addition to free credit scores, CreditKarma provides consumers with a wealth of completely free tools, advice and content that empower them to more actively manage their credit and their financial health.

What kind of score does Credit Karma provide?
CreditKarma score is a proprietary credit score, based on the TransUnion credit bureau’s TransRisk credit score.

CreditKarma score ranges from 300 to 850, which is the same scale as the FICO Score, the credit score most lenders and creditors use. It is also typically highly correlated to the FICO score.

Consumers can also have access to the new VantageScore and the TransUnion Auto Insurance Risk Score.

What other services does Credit Karma offer to consumers?

  • Free Credit Report Card
    This service is actually very useful. It analyzes your credit score so you are able to know what factors are contributing to it more than others, and how you might best be able to improve your score.
  • Free Credit Score Simulator
    This simulator allows you to simulate changes you plan to make in your financial matters and see how they will affect your score. For example, you can see exactly how lowering your credit utilization can increase your score, or just how much applying for more credit will impact it.
  • Free Credit Score Monitoring
    Although it’s based only on your credit information at TransUnion, this free credit monitoring may help you to monitor changes in your credit score as well as providing you some degree of identity theft protection.

So what are its drawbacks?
Credit Karma’s main drawback is that it’s based solely on the TransUnion data base. Since your credit information at the 3 major credit bureaus is not identical, this means that even if you use their free monitoring service you still need to order your free annual 3-in-1 credit report and check your information with Equifax and Experian.

For this reason, your identity theft protection is not full proof, as it monitors only the TransUnion’s data base.

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