What to Know About Credit Karma, Including Accuracy
Have you ever wondered what Credit Karma is and how it works? Maybe you have seen their advertisements on television? Are you wondering if Credit Karma is accurate?
Your credit score is one of the most critical financial information, especially when buying a home.
For a long time, creditors and lenders have used your credit score to determine whether they would lend to you and what terms they would offer.
Today, your credit score affects even more aspects of your life, possibly even your ability to get a job or successfully rent or purchase a property.
Credit Karma is a company that offers you a way to get free credit scores and reports from two of the three major credit reporting companies, TransUnion and Equifax.
The company has over 120 million members as of 2023, all of whom can get their free information from the Credit Karma site.
Credit Karma uses its members’ data to offer them targeted ads from financial partners to make money.
When buying a home for the first time, getting your financial house in order is essential before ever putting down your earnest money with a real estate agency.
Credit Karma helps you do just that.
One of the most substantial mistakes first-time homebuyers make is not preparing themselves well enough financially. The service can be your financial “right-hand man” in your home-buying journey.
Once you are ready to start, the Credit Karma sign-in will get you on your way. As you would expect, the Credit Karma login is at the top right of the screen.
From experience of almost forty years as a Realtor, the service has been a wonderful tool for my clients to improve their creditworthiness. From debt consolidation to knowing what to with finances, they are a reliable source of information.
Let’s take a deep dive into what you need to know about Credit Karma and what it offers:
Facts to Know
1. Credit Karma estimates your credit score based on information from two major credit bureaus.
2. The accuracy of Credit Karma’s credit score is generally considered reliable, but it may not always match the exact score provided by lenders.
3. Credit Karma’s score can indicate your overall credit health and help you monitor changes over time.
4. It’s important to remember that each lender may use a different scoring model, so the score you see on their website might not be the same as what a specific lender sees.
5. If you have concerns about the accuracy of your credit information, you should check your credit reports directly from the official credit bureaus for the most accurate and up-to-date information.
Credit Karma – An Overview
An Easy Way to Get Your Credit Report
The three major credit reporting bureaus, TransUnion, Equifax, and Experian, are required by federal law to give you a free credit report once a year. You have to apply for your reports through AnnualCreditReport.com.
While these reports are handy to see what lenders have reported to the credit reporting agencies and find inaccuracies to correct and improve your credit – they do not include your credit score.
Since you need to know your credit score to understand where you stand when applying for credit, the reports’ lack of a credit score is problematic. The reporting agency provided a less-than-adequate solution – offering to sell your score cheaply.
In 2007, Credit Karma came on the scene with a better option. They partnered with Equifax and TransUnion to give members ongoing access to their credit reports and credit scores.
Instead of waiting once a year to check your reports or being price gouged to get your credit score, you could sign up for Credit Karma and get what you need. This is how Credit Karma works and one of its best features.
So, to be crystal clear, the company offers a free service where you’ll have access to your credit profile.
What is The Company’s Origin?
Credit Karma is a multinational company that Kenneth Lin, Ryan Marciano, and Nichole Mustard founded. Lin is the chief executive officer, Mustard is the chief revenue officer, and Marciano is the chief technology officer.
Intuit, the owner of TurboTax, acquired the business for a reported amount of around $7.1 billion in cash and stock.
A Way to Help You Improve Your Credit Score
Unlike many companies in this industry, Credit Karma seems genuinely interested in helping its members improve their financial lives. It goes a lot further than just giving you access to your credit reports and credit scores.
The website also breaks down your credit report to show you where things have gone wrong, why, and how to fix those problems.
It will tell you how your credit score is calculated and what areas of your credit report are problematic, and it will give you recommendations on correcting issues and improving your credit steadily over time.
Barring suddenly coming into a lot of money through inheritance or winning the lottery, there are usually no quick, easy fixes to credit problems. However, with steady pressure, you can work to improve your credit history.
Their tools tell you how and where to apply such pressure, giving you actionable recommendations that will produce the results you desire if you stick with them.
How Accurate is Credit Karma?
A significant question asked is how accurate credit Karma is. This question always comes up because there are different credit scoring models and credit scoring bureaus.
Credit Karma’s accuracy is questioned when consumers see their score on the site and find it is higher or lower elsewhere.
When someone asks if Credit Karma is accurate, the answer is yes, based on the information they provide.
The company does not use the same credit information as the FICO model, and you must remember that.
No FICO Scores
Your FICO score is essential for specific situations – mortgage lenders look at your FICO score to decide whether they will lend to you and what terms they will offer. The FICO score is considered the industry standard.
The score also helps lenders determine the likelihood you will pay the loan back and not end up having a foreclosure on your property. Fico scores are considered the standard for credit scoring. They are used by ninety percent of the top lenders to help them make the best lending decisions.
Here’s some trivia: The Fair Issac Corporation created FICO scores in the 1960s.
Credit Karma does not offer its members FICO scores, which some people see as a significant drawback to the site. However, Credit Karma has a response to such criticism that clarifies the benefits they offer and their overall purpose for their members:
A Response to Criticism About The Company Having an Accurate Credit Score
“It’s important to remember that no one credit score is the end-all, be-all. There are dozens of different FICO® scoring models alone. Even if you’re confident in a specific FICO® credit score, it may not necessarily match the scores a lender pulls when you apply for a loan.
At Credit Karma, we believe that because you can have so many different scores, the exact number you get at a given time isn’t of foremost importance. What’s more important are the changes you observe over time in a single score and where that number puts you concerning other consumers.
By using Credit Karma to monitor your VantageScore 3.0 credit scores from Equifax and TransUnion over time, you can have an easy point of reference to gauge your overall credit health.”
The take-home message here is that when someone asks how accurate Credit Karma is, don’t always believe the negative news you see on social media from those attacking the company, like Twitter users.
The company uses VantageScore credit scores, which differ from FICO credit scoring. They are just different scoring models, which does not make them any less accurate.
The VantageScore model is a respected alternative. Just because they provide different credit scores doesn’t mean the information isn’t helpful.
Less About Perfect Accuracy and More About Improving Credit Health Over Time
Are there any drawbacks to Credit Karma? Users of the tool notice that the credit score they see on the site can vary slightly from the ratings they see on other websites and from different providers.
The company devotes a whole article to discussing the question of accuracy and variation. They explain that differences in credit scores are typical and expected due to the nature of credit reporting.
The variations are unlikely to be significant. The company’s overall goal is to help people track how their credit score changes over time and offer them ways to improve their score and financial health.
There are several reasons why credit scores can vary from those found on Credit Karma, including:
Why Credit Scores Can Vary
- Information may be incorrect on a credit report. If information is wrong on your credit report, it will affect your score. Fortunately, you can dispute inaccurate information using the Credit Karma Direct Dispute tool. Correcting incorrect information on any credit report is vital, especially if you purchase a home shortly. You can learn how to dispute errors in a credit report in this helpful article from Norton.
- Some lenders do not report to all three major credit report companies. If a lender does not report to a credit report company, that company’s score for you will be different from the score you have at a credit report company with that lender’s info.
- Scoring models differ among credit reporting companies. Each credit reporting company has its scoring model, which they use to weigh the importance of different aspects of your credit. Since they use other models, they can generate different scores using the same information. You will notice that all credit agencies have slightly different scores.
So, hopefully, you now have a better understanding of Credit Karma accuracy.
How Often Are There Updates?
Besides asking if Credit Karma is accurate, another popular question is how often the site updates credit information. Transunion is now updating its credit information every day.
Keep in mind that credit scores are fluid. Also, remember that Transunion is only one credit bureau. It is important to remember this is only one piece of financial information in a sea of much more.
Your credit scores will change as more data arrives at each credit bureau. Transunion credit reports being updated more frequently is a good thing. The more updated your data, the better.
Pros and Cons of Credit Karma
Advantages
- Signing up for Credit Karma is easy.
- The site is free to use.
- The company has a favorable user experience.
- It does an excellent job of explaining how credit scoring works.
- It has excellent suggestions for fixing problem areas with your credit.
- The company pulls its data from third-party resources.
Disadvantages
- You will get intrusive financial recommendations.
- It will only show you two of your credit scores.
- You can’t change the auto-logout setting.
Easy to Login and Use The Site
Signing up for their financial tool is straightforward and only takes a few minutes. You must give them your name and address and some finance-related personal details like your social security number. The sign-in and login are super easy to use.
As you would expect, the Credit Karma login is in the upper right-hand corner of the site, so signing in is a breeze.
Given the company will be holding your sensitive information, it offers security features that all users should consider opting into. Doing so keeps Credit Karma’s users’ information safe from hackers. There will be much less worry about identity theft.
An Account Has Security Measures
For example, if you log in from different devices, you can get a text code to verify your identity with two-factor authentication.
You will be able to turn credit and identity monitoring on or off. You can also request email notifications for changes to your credit score, special promotions, etc. Having these options comes in handy, especially if there is suspicious activity.
If you need to reach Credit Karma by phone, call them at 1-888-909-8872. They can answer your calls from 8 a.m. to 11 p.m. Eastern time.
Using their toll-free number will be how you reach Credit Karma customer service.
How Do They Handle Identity Theft and Fraud Alerts?
They take the issue of identity theft and fraud alerts very seriously. The company has implemented a robust system to detect and prevent such incidents.
When a user signs up, they must provide personal information that is used to verify their identity. This information is then cross-referenced with various databases to ensure its accuracy.
In addition, they continuously monitor users’ credit reports for suspicious activity or unauthorized changes. The firm promptly notifies the user if potential fraud is detected. They provide them with detailed instructions on how to resolve the issue.
There are also resources and support to help users recover from any financial damage caused by identity theft.
Using Their App
If you love to access your financial information on your phone, you can use the Credit Karma App. The mobile app is free to download for iOS and Android users. The app has tools and features that allow you to stay on top of your finances and check your credit score for free.
You can also file your state and federal tax returns with Credit Karma tax and put away cash with Credit Karma Savings.
With the app installed on your phone, you can receive credit alerts if the company gets a crucial change to your credit reports from Equifax or Transunion.
For example, if your credit card bill got paid off. Their free credit monitoring tool helps you keep up to speed on your finances and any unwelcome surprises.
Using Relief Roadmap
You will find personalized tools like the Relief Roadmap that work best with the app. Relief Roadmap is a new tool that has been added to the site. It helps you to understand programs and financial services that may be of great benefit to you.
For example, you will be shown resources about unemployment benefits, government stimulus programs, debt relief opportunities, and loan options you might qualify for.
The Relief Roadmap will update you as the app sees new resources. As you continue using the app, you’ll get tips and advice to help improve your credit and financial standing.
Once you have signed up with the site, the app is an excellent tool worth exploring.
What is Their Tax Service?
Most people think of Credit Karma because of their credit score monitoring and improvement tools. Many people have never heard of Credit Karma tax until they get in and use the site.
Like their credit scoring tools, Credit Karma tax is free to use. As you would expect, the service is used to help you to prepare your taxes.
As you might expect, preparing a Credit Karma tax return probably would not be the best for folks who have complicated taxes. Their tax review would be more appropriate for those with a reasonably straightforward tax situation.
With any free software, it’s not going to be best for everyone, but tax software can satisfy many people.
It is worth noting that their tax program cannot be used everywhere. There are forty states as well as DC that allow their service.
Credit Karma Tax does offer more options than other free tax services. Their support will handle requirements such as independent contractor income, landlord income, and student debt interest.
Use The Tax App
Credit Karma has a Tax App you can use right from your phone if you love the convenience and don’t have a complicated return.
You can complete most tax return tasks from your cellphone when you download the app.
Doing so will help with preparations for both federal and filings in some states.
When you are filing and have itemized deductions, Credit Karma Tax will guide you through the deductions that are possible to claim.
The service will show you how much of a difference your itemized deductions have made to reduce your taxes.
They provide chat support only during tax season if you need software assistance.
Credit Karma Tax is free and an excellent addition to all their other services.
What is Credit Karma Savings?
Another feature the company offers is Credit Karma Savings or their trademarked name, Credit Karma Money. As it sounds, the company provides a high-yielding savings account where you can deposit your money.
If you are risk-averse and don’t want to put your money in places where you could lose some of it, a savings account is usually an excellent choice.
Credit Karma Savings is free to use. You can manage all of your money from the Credit Karma app. The benefit of a high-yielding savings account is that it offers higher interest rates than traditional savings accounts.
Like traditional savings accounts, high-yield savings plans are insured for up to $250,000. A Credit Karma account can be an excellent enhancement to improve your financial situation.
How Does The Company Make Money?
Since the company does not charge its members for the free credit reports and free scores, it offers, or for all the targeted advice it gives members. They have to make their money some other way. They are pretty transparent about how they earn income.
Unlike many other companies that offer free services for personal information, the company does not sell your information to other companies. Instead, they use your information to present you with targeted advertisements for financial services, like credit card offers and loan offers.
As a member, you will be shown credit card offers that will likely be approved based on your credit score. Not only are you likely to be accepted, but you are also expected to get some benefit from the credit card issuers – like being able to transfer your balance from a high-interest card to a low-interest card.
The idea is that their business model can create a situation where everyone wins – members get the financial services they need, lenders get customers, and the company makes some money from the transactions.
The site offers numerous tools to help your finances.
Credit Karma vs. Credit Sesame
Many folks wonder what the similarities and differences are when comparing Credit Karma to Credit Sesame. While both companies offer free credit monitoring tools, Credit Sesame also has a paid version.
Credit Sesame does not have as many clients at the moment. Credit Sesame derives its credit information from Transunion only. There are no Equifax credit reports.
The paid features with Credit Sesame come in Pro and Platinum, which are $15.95 and $19.95, respectively. Some perks you get as a pro member include monthly credit reports from all three credit bureaus and monitoring alerts.
With the platinum plan, you get stolen or lost wallet protection, social security, and ID monitoring.
Frequently Asked Questions
How do you log in to Credit Karma? – visit CreditKarma.com, and you will see the information that allows you to log in to the site.- Is Credit Karma Accurate? – when using any credit service, you want to know that it is accurate. The company uses credit scoring information from two credit bureaus, Equifax and Transunion. Credit Karma accuracy is questioned because they do not use FICO scores, which most lenders use for credit scoring. So, their tool is accurate based on the information they provide.
- Will Credit Karma hurt your credit? – No. When you check your credit score on the site, it is a “soft” inquiry not sent to the credit bureaus. Only “hard” inquiries, such as a lender’s credit check when applying for a mortgage, are reported.
- Why Is My Credit Karma Score Different From My FICO Score? – FICO and VantageScore are the two largest credit rating systems. Credit Karma uses VantageScore. Their models differ on how much weight they put on various factors in your spending and borrowing history.
- What is Credit Karma Tax – as previously mentioned, they have software that will allow you to do your tax return. The tax returns can also be done from your phone if you download the app.
- Is Credit Karma free? – Yes. They do not charge their customers fees. As mentioned, the company makes money by presenting advertisements to its customers.
- Does the company charge for Credit Karma Tax or Credit Karma Savings? – No, both services are free.
- Is Credit Karma safe to use? – Yes. They employ 128-bit encryption, which is almost impossible to crack, to protect data transmission.
- Where is the Credit Karma login? – You can find the Credit Karma login in the upper right-hand corner of the home page.
- How do I contact them? – here is how you can reach Credit Karma. From there, you will be able to speak with their customer service. As previously mentioned, you can also reach them by phone at 1-888-909-8872.
Using Their Services and Buying a Home
If you plan on buying a home, your credit score will play a big part. Lenders will use your score to decide whether they will lend to you, how much money they will give you, and what kind of loan terms they will provide you.
You can wind up paying far more for a home with a low credit score than a high credit score simply because of the better interest rates you will get from a high credit score.
The tool will not give you the FICO score lenders will look at when they process your application, but that does not mean the site cannot help homebuyers. It should be understood that Credit Karma score accuracy will not be the same as FICO.
You can use the site to help you improve your credit. Follow the advice you get as a member to enhance your credit, and you can expect your FICO score to grow.
A good credit score benefits most aspects of your financial life. Getting the best credit can save you thousands of dollars when getting a mortgage, personal loan, or credit card.
Buying a house with bad credit can be far more challenging
A Video Review of User Experiences
Please watch the quick video of one of Credit Karma’s users sharing their experience using the site.
Tips to Increase Credit Scoring
Now that you understand the importance of credit scores in purchasing a home, it’s time to improve them. So, what are the best ways to go about getting your credit score to increase quickly?
Here are some sound tips for upping your credit score:
Pay Bill Promptly
- Always pay your bills on time – one of the most vital aspects from a lender’s standpoint is to see how probable you’ll be expeditiously paying your bills. You can positively influence credit scoring by always paying bills within their due date. Payment history will be a crucial factor in lending decisions. Financial institutions hate seeing late payments on credit reports.
Debt Consolidation is Wise
- Pay off your debts – pretty much common sense. Lenders don’t want to see that you owe other creditors lots of money. Consider paying it down first if you have an auto loan with a significant balance.
Don’t Max Out Your Credit Card
- Keep balances low on your credit cards – one of the factors that can significantly impact your credit score is what’s known as your credit utilization ratio. The ratio is calculated by adding your credit card balances and dividing that amount by your total credit limit. For example, if you usually charge about $3,000 monthly and your total credit limit across all your cards is $10,000, your utilization ratio is 30%. Mortgage companies like to see your utilization under thirty percent, but the lower you get it, the better. Having high balances is not a good thing when trying to procure loans, especially a home purchase.
No New Credit Accounts
- Don’t open new credit accounts unnecessarily – having mortgage credit cards is generally not good. You will be just tempting yourself to have more open credit. More inquiries will be against your credit report by having new accounts, which isn’t ideal.
Don’t Close Accounts
- Don’t close credit cards you’re not using – contrary to what you might think, closing credit cards does not help you increase your credit score. Having unused credit cards open is a sound strategy as long as they do not cost you money. By closing an account, you could be increasing your credit utilization ratio. Owing the same amount but having fewer open accounts might lower your credit scores.
No More Credit Cards
- Avoid applying for new credit – getting another new credit card can increase your credit limit. Still, applying for credit adds a hard inquiry to your credit report. Too many hard credit inquiries can negatively affect your credit score. Hard checks can remain on your credit report for two years.
Fix Discrepancies
- Fix any credit reporting errors – make sure your public records are accurate. Believe it or not, it is not unusual at all for there to be multiple credit report errors. These mistakes can have a dramatic impact on your credit score. As mentioned above, when you purchase a home, vigorously comb your credit report for errors. If not, get them corrected right away.
It would help if you strived to get your credit score above 740, especially when buying a home will be in your financial future. A credit score above 740 is considered very good. Lenders see borrowers above this amount as being dependable.
Get your score above 800, and you will be regarded as one of the best. You will be considered a minimal risk to mortgage lenders.
Striving to increase your credit score when buying a home is just plain smart - use Credit Karma as a tool to make it happen!Click To TweetWork With The Right Mortgage Company
One of the most significant decisions when purchasing a home for the first time will be picking the right lender. Numerous homebuyers don’t make enough effort to choose the right mortgage company.
The mistake often made is focusing on the interest rate offered, not the loan’s total cost.
Lenders can make a particular loan product look enticing by their advertised rate. Sometimes, however, the cost, when compared to other loan programs, is not the best.
At the initial stages of procuring financing, ask the lenders many questions. Getting the answers you desire will go a long way toward being happy in the long term.
As a first-timer, many exceptional first-time buyer loan products are available. Whether looking for a low or no-down payment loan, you’ll have plenty of outstanding choices.
Finding a real estate agent you find dependable and trustworthy is just as essential as finding the right fit with a mortgage company.
An excellent agent can be a valuable resource in finding a loan specialist. It is one of the many services a real estate agent provides to their buyer clients.
More Outstanding Mortgage Advice
- How do home improvement loans work – are you planning on remodeling your home? One of the essential decisions you’ll need to make is how to finance the project. Fortunately, there are now tons of options available. See all of the home renovation loans you can use.
- Mortgage terms buyers and sellers should know – see thirty-five different mortgage terms you should at least have a basic understanding of. The more you learn about financing, the better off you will be when buying or selling.
- Frequently asked mortgage questions – when buying a home, it is vital to ask many questions. You must understand the process, especially when getting a mortgage. See what most people like to ask and the appropriate answers.
Use these additional mortgage resources for helpful advice before buying your next house.
Company Reviews to Know
Before making a final determination on whether to use their service or not, you might want to check on their reviews. As a financial services company, they get decent reviews. A lot of people trust using their service daily.
Consumer Affairs offers some helpful reviews for you to look at about the services provided.
Final Thoughts
One of the most crucial parts of becoming a homeowner is getting your finances squared away well before your purchase. Your credit score should always be a work in progress when you don’t have the best scores.
The tools provided can go a long way in helping you reach your journey of financial nirvana. It would help if you remembered that the scores provided are not identical to FICO scores. I don’t think Credit Karma’s accuracy is off because of this.
Hopefully, you have found this guide on using Credit Karma helpful.
About the Author: Bill Gassett, a nationally recognized leader in his field, provided information on whether Credit Karma is Accurate. He is an expert in mortgages, financing, moving, home improvement, and general real estate.
Learn more about Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 38+ years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
