Michael Barton explains to us just how important our credit score is, and how we can improve it and protect it. There are platforms out there that claim to help us do this, and we put Credit Karma through its paces in this Credit Karma review.
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Yes, Credit Karma really does provide your credit score for free. But is it the best credit reference app for you to use?
In this article, we review Credit Karma’s features, discuss its pros and cons, and give you a few tips for how to get the most out of it.
If you’re new to credit scores, want to repair your credit score, or have several credit lines (like credit cards and personal loans), Credit Karma is a free service that can help you monitor, manage, and improve your credit score. While its customer service leaves a lot to be desired, it offers several features that should help you to become better at managing your financial reputation – and this will help you access better and cheaper credit deals.
Why Should You Keep Track of Your Credit Score?
Keeping on top of your credit score is crucial. The higher your credit score (or credit rating), the more likely you are to be accepted for a personal loan, credit card, mortgage, or other line of credit. Not only this, but when you have a high credit score you are seen as lower risk by lenders – and lower-risk borrowers usually pay lower rates of interest.
By keeping a watchful eye on your credit score, you’ll be able to observe how your rating is moving over time and if there are any ‘nasties’ that you need to correct. Taking swift action could prevent an unwelcome surprise further down the line.
How Can You Keep Track of Your Credit Score?
Credit scores are collated by three credit agencies – Equifax, Experian, and TransUnion. Each holds information on you that lenders use to assess your creditworthiness.
If you want to apply for credit, a lender will approach these agencies and check your scores. To ensure there are no errors that could put your credit application at risk, you should check your credit report with all three agencies regularly. You’ll need to check things like:
- Addresses on your financial accounts
- Existing credit limits and credit usage
- Expired accounts
- Rejected loan applications
- Missed payment records
- CCJs against you
You can approach each credit agency to check your credit history and current credit status. However, a credit report does not include your credit score. To reduce the amount of work needed to check your credit score, you could instead use a credit agency like Credit Karma.
What Is Credit karma?
Credit Karma (full name Intuit Credit Karma) is a credit broker. By registering with Credit Karma, you can get free access to the most up-to-date credit report provided by TransUnion. This is a free service. You won’t ever be charged a penny to access your credit score.
How Does Credit Karma Work?
The information that Credit Karma presents to you includes information about your past financial behaviour and current financial accounts, including credit agreements. It’s updated weekly, which is more often than some other credit score agencies.
You can receive regular updates of your credit score or when changes occur. This will help you to keep your credit score in a healthy state. All this is free.
So, how does Credit Karma make money?
As a credit broker, Credit Karma also provides a range of other services, like personalised financial product offerings, credit card recommendations, and more. It receives commissions on sales of financial products.
The benefit to you is that you’ll know if you are likely to be accepted before you make a credit application. This matters, because being refused for credit can negatively affect your credit score and make it harder to get a loan. Credit Karma’s eligibility checker, and approval odds indicator, remove a lot of this worry (though other factors may apply when the lender’s credit criteria come into play).
Is Credit Karma Really Free?
You’ll never have to give over your credit card or debit card details. Credit Karma has committed to retaining its free services. However, like most free fintech services, while there may not be a financial cost to you, there is a way you can be of use to them.
Credit Karma uses the data you provide (and that the credit agency provides) to deliver targeted advertising. This is how it personalises all the financial offers it shows you – from credit cards to loans, energy-switching offers to internet and mobile options – whether you’ve shown an interest in them or not.
If an advert that is displayed on the Credit Karma site spurs an interest with you, should you make an application or sign up for a new energy supplier, as examples, Credit Karma is paid a commission.
Does Credit Karma Share Your Personal Information?
Are you now wondering if Credit Karma shares your personal information with other companies? I don’t blame you if you’re hesitant about this. I hate it when this happens. You sign up for a service and then you begin to receive unsolicited sales calls and/or emails.
Rest assured, though, your personal information is kept safe from third-companies. Credit Karma only uses your data if you give permission, and doesn’t share any of your personal information with unaffiliated third-party companies.
The Credit Karma Dashboard
There are several features that you can use when you register with Credit Karma. These will help you to track and amend your credit score.
When you log into your account, you’ll open your personal dashboard, and see your credit rating in a box like the following:
If you click on the ‘Build’ button, you’ll see a page that provides recommendations for how you can build your credit score. For example:
- Increase your credit score
- Reduce your credit usage
- Register on the electoral roll
- Update your Credit Health
Scroll down further, and you’ll see a section titled ‘Things you’re doing well’. These are things that you should continue doing, such as:
- Keep your existing credit card open
- Continue to make credit payments on time
- Apply for a new credit card
This is a great snapshot of how your credit rating stands and the financial elements you should focus on to improve your credit score.
At the very bottom of this screen you’ll see a section titled ‘Take action’. In this, you have clickable icons that will take you through to the other sections of the Credit Karma website, where you will be able to access personalised financial offers. You do this by filling in a form for each financial element:
- Credit cards
- Personal loans
- Car buying
The forms are straightforward, and once completed you will be presented with a range of options that satisfy your need.
There are also other clickable icons in this section of your dashboard:
- Credit monitor – this tells you of any priority alerts in the last 90 days that you should attend to
- Smart moves – this asks questions about your finances and gives recommendations to improve your credit score
How Does Credit Karma Help You Learn to Manage Your Credit Score?
Your credit score evolves as your finances change. When you use Credit Karma, you’ll see your score move, and the reasons for any change.
Its ‘Learn’ pages provide insights into themes and topics that affect your credit score, and information about financial strategies that you might use to improve it. These articles are written like blogs, so are easy to read and understand. On top of this, you should also use Credit Karma’s online Help Centre.
You’ll find articles that help you learn about your credit health, identity protection, a range of financial products, and energy and digital offers, among other items that help you use your Credit Karma account effectively.
The Credit Karma Credit Score Simulator
It’s hard to make financial decisions that impact your credit score without knowing how they will impact it. Credit Karma excels here. You can find out the likely impact of, say, opening a new credit card account, applying for a personal loan, reducing borrowing, and more with a click of a button.
This advice is personalised to you, though Credit Karma also points out that it is only indicative – in other words, a potential outcome and not necessarily the actual outcome. However, we find it a very useful tool to give you an idea of what your best course of action should be.
Credit Karma’s Online Dispute Process
This is another great credit management tool. If there is an item on your TransUnion credit report that you disagree with, you can lodge a dispute directly from your Credit Karma account. It’s a really easy way to do what is often a cumbersome task.
Credit Karma’s Ads
As soon as you log in, you’ll see suggestions for financial products that might be applicable to you. Essentially, these are ads ─ after all, commission is how they make their money, and you get to keep free services.
As you move deeper into the app, you’ll see more of them. If you’re looking for a new credit card or car loan, they may be useful – the recommendations do, overall, tie in with weaknesses in your credit score. However, it does feel a little like a hard sell – passively aggressive!
The ads are supposedly based on what Credit Karma knows about you from the information you provide and the credit report from TransUnion. You may find information about some of the financial products in its blog, but it’s always worth searching out reviews of any financial product or service before buying.
Is Credit Karma Safe for Users?
Credit Karma’s security features include multi-factor authentication, and 128-bit (or higher) encryption. You may also be asked some security questions when using its email help service. You’ll be signed out automatically after a period of inactivity. Apart from all of this, you only provide a limited, necessary amount of personal information.
How Do You Create a Credit Karma Account?
It takes only a couple of minutes to sign up for Credit Karma. You’ll be asked a few basic details – like name, county, date of birth, etc. – and then sent a verification email to verify your account. It’s that easy.
Pros and Cons of Credit Karma
As a brief rundown of the service, here’s a summary of the pros and cons of Credit Karma:
Here’s what we find great about Credit Karma:
- It’s free, and easy to sign up
You don’t need to provide any card details, and access to your credit score is free for life. Creating an account takes only a minute or two, and you can view your credit score immediately. This makes it much faster to review than applying for your credit report direct from TransUnion.
- It’s easy to use
The layout of the website, and its navigability, make it easy to use. We like the icon features, which help to delineate the services offered.
- Weekly updates and notifications
For some, a weekly update on the credit file may seem a little overkill. However, we like that this means your credit score is never more than seven days out of date.
- Credit improvement recommendations
It’s great to get easy-to-implement recommendations for improving your credit score. We also like how these recommendations are often linked to potential solutions (like credit card suggestions).
- Good indications of credit acceptance
When loan and credit recommendations are made, you receive an indication of the likelihood of being accepted. This means that you can apply with much more confidence, though you must remember that this isn’t a 100% guarantee that you will be accepted – the lender may have some terms and conditions that work against you.
- Energy switching service
The energy switching service could help you save money on your electricity and gas supply. A good service for all times, not only during the cost-of-living crisis.
- Learn and Help Centre articles
You’ll find a good amount of information that will help you to take control of your credit rating. These articles are like blog posts, so are easy to read and understand.
Now, for what we don’t like about Credit Karma:
While all the recommendations are great to receive, it does feel a little ‘salesy’, with products being pushed for commission rather than to make your financial life easier.
Of course, this is how the company makes its money and how its service can be provided free of charge. But it would be better if the products pushed were those that are relevant to you. Sometimes it’s as though you’re being encouraged to take a new credit line.
Not always the best recommendations
The recommendations made to you, and the other deals shown on the Credit Karma website may not be the best offers available or the best solutions. The site only has a limited amount of information about you, and works with only those companies that pay them a commission on sales. Therefore, it’s always best to shop around, using Credit Karma’s suggestions as a foundation for creating your own solutions.
Here’s my biggest bugbear with Credit Karma. Its customer service is not very good. I’m not the only one to think this, either. Look at Trustpilot, and many of the negative comments and 1-star reviews are centred on poor customer service.
For example, when I first signed up, things went swimmingly for the first few minutes. But when I tried to log in a second time, I couldn’t. I kept getting a very frustrating ‘Please try again later‘ message, with no further help suggested.
While there is a lot of info in its FAQ section, there was nothing to resolve my issue. Here’s where things started to get infuriating.
There is no phone-based support. There isn’t even a chat-bot, or agents to speak to on a messaging system. So, I was left with email. I detest email help with this type of service. It’s usually slow, clunky, and laborious. Which is exactly how Credit Karma’s email help turns out to be.
I also have a feeling that it could be run, in part at least, by AI-driven support – though this is just a hunch. I’m otherwise flummoxed by why there was a need for me to submit my passport photo to ask for help.
I did get a nice reply, assuring me that they were looking into my issue, but they were currently experiencing high volumes, and thanking me for my patience… blah, blah, blah. The standard holding email – impersonal delaying tactics.
Anyhow, it took a week to resolve what could probably have been resolved in two minutes by a phone-based human agent.
Tips to Get the Most Out of Your Credit Karma Account
Credit Karma is a platform that allows users to access their credit scores, credit reports, and other financial insights for free. Here are some tips to use Credit Karma effectively:
Check Your Credit Score Regularly
Log in regularly (at least once a month – set a repeat calendar reminder) to monitor your credit score. This will help you understand the impact of your financial decisions on your credit score and catch potential issues early.
Review Your Credit Reports and Dispute Discrepancies
Look beyond your score and examine the full report. Check that the information is correct and there are no discrepancies. If there are, lodge a dispute immediately.
Set Up Notifications/Alerts
Credit Karma offers features that notify you when there’s a significant change in your credit report; for example, a drop in your credit score, a new inquiry, or an account change. Take advantage of these alerts to remain updated and ahead of the game.
Understand What Affects Your Credit Score
Read the articles on the Learn and Help Centre pages, and get to understand what impacts your credit score. This will help you to make better financial decisions and improve your score.
Use the Simulator
Use the simulator to see the likely impact of making any financial move, like opening a new credit card account or paying down debt. It’s always useful to know what impact your financial decisions have on your overall financial standing.
Use the App
Credit Karma’s mobile app may be more convenient for you to get credit reports on the go. Ensure the app is updated regularly to take advantage of new features and security enhancements.
The recommendations that Credit Karma makes to you may be useful. They may make you think about more effective ways to manage your finances. However, while these can be helpful, it’s essential to research these suggestions independently and determine if they fit your needs.
Maintain Online Safety
When you open your account, be sure to set a strong password. Always access Credit Karma through a secure network (not a public Wi-Fi network) and do log out when you’re done.
Avoid Impulse Decisions
Remember that Credit Karma makes its profits from its users signing up for its recommendations. Avoid taking immediate action upon its suggestions. Always do your research to find the best solution for you. Not every recommendation will be the best, and not every product will be the cheapest. Shop around, always!
Alternatives to Credit Karma
One of the things that we like about Credit Karma is that it is free to use, and provides some great info to help you manage your credit score more effectively. However, there are other similar services that are also free. These include ClearScore (which I also use myself), and TotallyMoney.
If you are happy to pay to see your credit score, checkmyfile provides what it calls the UK’s most detailed online credit report, with data from four Credit Reference Agencies: Equifax, Experian, TransUnion and Crediva. This allows you to easily compare what each is reporting about you.
The Bottom Line ─ Should You Sign Up for Credit Karma?
We like Credit Karma. It’s got an easy-to-use interface, and provides a lot of useful, educational information through its Learn and Help Centre articles.
Overall, it provides valuable recommendations, though you may become frustrated with the aggressiveness of its sales push. You’ll get used to ignoring most of these. However, they are useful to get an idea of what offers may be available to you, what interest rates you should be paying, and as a foundation for further research into the financial products that will help you to manage your financial life more effectively.
If you need to go any further than Credit Karma’s help articles to resolve a query, you’ll be frustrated by its email help service.
As a tool to help you monitor and manage your credit score, Credit Karma gets a thumbs up from us.