Easy Setup
Getting started with Credit Karma only takes a few minutes. You need to provide your name, address, and a few finance-related personal details, such as your Social Security number. Because the site holds such sensitive information, it offers several security features, all of which you should use. You can request a texted code to verify your identity with two-factor authentication if you log in from a different device, for example, or answer security questions. You can turn credit and identity monitoring off or on, and request email notifications for special promotions, changes to your credit score, ID monitoring, and so on.
Credit Karma posts its advertiser disclosure on many pages. It explains that Credit Karma receives compensation from third-party advertisers that have some influence on where and how products appear on the site (like the order in which they appear). This is how Credit Karma can offer so much content for free, and it’s a business model used by competing sites.
A Unique Service
We have not run across a website that offers serious competition to Credit Karma's credit score-monitoring capabilities. NerdWallet comes the closest, but it only provides one credit score, and the depth of its data and tools is marred by a disjointed, sprawling user experience. Credit Sesame is young enough that it hasn’t built up Credit Karma’s depth—plus you pay up to $19.95 per month for some of its services, where the other two are free.
Whether you simply want to keep a close eye on your credit score or you have some work to do on it, Credit Karma can help. Its website and apps are attractive, thorough, and require minimal navigation to find what you're seeking. However, if you want a more well-rounded, full-service personal finance solution, look to Mint (the Editors' Choice winner for free personal finance apps) and Quicken Deluxe (the Editors' Choice pick for paid personal finance apps). They offer some credit score information, but they also provide income and expense management, budgeting, and bill-tracking tools. We suggest using one of them but also subscribing to Credit Karma.
Credit Karma’s iPhone app (left) allows you to drill down into the details of your individual accounts. You can use Credit Karma’s Credit Score Simulator on the service’s Android app (right).
Mint's mobile apps, though, are the ones you'll turn to when you're away from your computer and need to quickly know whether, for example, you can afford to buy something. You can also see how a particular purchase fits into your budget, as well as recently posted transactions.
Credit Karma's Terrific Mobile Apps
Credit Karma's Android and iOS apps are similar in that they deftly replicate the browser-based experience. In fact, I prefer using Credit Karma on my phone because of its attractive, compact design. I found everything I wanted to see there, including the calculators, the Credit Score Simulator, and other resources you can use to work on improving your credit. Both apps offer quick access to your credit scores and reports, recommendations for financial products that might be more economical, comparison shopping, and suggestions for improving your credit scores. They also let you take deep dives into the details of your accounts. Four icons at the bottom of the screen are all you need for navigation.
Making Improvements
The site's goal is twofold: to help you save money and to encourage you to take actions that could improve your credit score. So, Credit Karma offers tools that help you do both, including the Credit Score Simulator. It displays several moves that might trigger a change in your credit score, such as getting a new loan, letting your accounts go past due, and receiving a credit limit increase. Click one, supply any required additional information, and a graphic at the top shows you what your new credit score might be.
Other tools that might be helpful to you are interactive calculators for mortgage refinancing and debt repayment, and recommendations based on your current financial situation. These are sprinkled throughout the site, but you can see several at a time by clicking on My Recommendations in the toolbar. You can also search for credit cards by filters like Balance Transfer, 0% and Low-Interest, and Travel (miles).
Obviously, Credit Karma knows a lot about you and could use that information to its advantage. However, the company says it does not spam its users or sell your data to its partners. I did not see an uptick in breathless offers to my inboxes during our testing period.
Credit Karma helps you understand the impact of several specific actions on your credit score.
Since I last reviewed Credit Karma, the company has added a no-fee (not even overdraft fees) checking account to its financial services: Credit Karma Money Spend. You must already have a Credit Karma savings account to open one, and there’s no minimum balance. If you have your paychecks deposited there, you could get your money up to two days early. You can also get free withdrawals at 55,000+ ATMs using your account’s VISA debit card.
The company is trying to encourage consumers—particularly those in the underserved and subprime category—to develop better spending and saving habits, which means, for one thing, using cash whenever possible. It rewards responsible financial behavior, too. For example, its Instant Karma program selects account holders randomly for a cash prize when they use their checking accounts. Plans for Credit Karma Money include automated bill payment and payment date optimization.
Telling Credit Karma About Your Loans
Before you can use Credit Karma's tools, you need to enter information about any loans you have beyond credit cards. If you have an auto loan, for example, you provide details about the year, make, model, and current mileage of your vehicle. The site creates a page for that vehicle that displays its current estimated value, as well as links to insurance and loan refinance options. You can also search for a new car and sell or trade your existing one. Credit Karma partners with Carvana for that last capability.
Home loans work similarly. If you supply information about any mortgages you've taken out, you’ll see your estimated home value and loan balance. If Credit Karma thinks you could get a better deal, it displays refinancing opportunities that might be attractive. Due to low interest rates, mortgage lenders are apparently swamped right now. You can turn on the new Refinance rate tracker and get notifications when Credit Karma finds a better rate. Similar tools are available for personal loans.
Two years ago, Credit Karma introduced what it calls a High-Yield Savings Account (banking services provided by MVB Bank Inc.) called Credit Karma Money. Of course, in these days of almost nonexistent interest rates, that yield amounted to 0.13% APY on the day I checked it. The account has no fees, and there is no minimum to open it. You can link one external account to your Credit Karma savings account by providing your online banking username and password.
Tracking Your Credit Score With Credit Karma
Credit Karma’s two credit scores come from TransUnion and Equifax. It's not uncommon for the two scores to be different. There are many reasons for this, and a lot depends on your lenders. They may not report to all three credit unions—some don't report at all—or their updates may come in at different times.
You click the Score Details under Overview menu to learn more about your credit score. Here, you'll see a four-month graph that displays changes to your credit score. You can toggle between TransUnion and Equifax. Below that is a series of boxes that show the factors that have the most and least impact on your credit score. Credit card use, payment history, and derogatory remarks fall into the first group, while credit age, total accounts, and hard inquiries are less influential. You can click those elements to see additional details.
You can also view your current credit report, as well as many from the past. When you click an account in your credit report, you see an overview of that account’s credit-related details, including your payment history over the last four years, current balance and payment status, and credit limit. It's here that you can dispute an error.
Click on an account in your credit report and you get an overview of it.
Navigating Credit Karma
A simple site demands a simple user experience, and Credit Karma supplies it. The dashboard has changed since the last time I reviewed the site, but it’s still effective. At the top of the dashboard is your credit score, as reported by two of the three bureaus. Credit Sesame only provides one at its free level. A semicircular graphic pinpoints where you fall on the scale of possible numbers, and arrows illustrate whether your current score has gone up or down since the last report. TransUnion now checks your score daily.
Below that are links to internal homes pages for your credit, auto, housing, and loan accounts. That said, you must wade through numerous ads for suggested financial products. You might be told that you could pay less for auto insurance, get a low-interest loan, or refinance your mortgage, for example. These opportunities are all tied to elements of your credit profile and personalized for you. Toward the bottom of the screen is the actual data about your credit, including a list of accounts with open balances.
Mint has a start screen that provides a link to your credit score, but it also offers a much broader, deeper picture of your personal finances. Like Credit Karma, Mint pays for itself by displaying ads for financial products that might suit you, but its home page does a better job of giving you an immediate overview of your finances. NerdWallet, too, offers many tools that are similar to Credit Karma’s. It has improved since my last review, and it now poses a greater threat to Credit Karma’s top status.
Credit Karma is an aptly named personal finance service. If you pay your credit card bills in full and on time every month, don't open and close accounts frequently, stay current with loan payments, and avoid negative events (such as bankruptcies and tax liens), you'll be rewarded with an enviable credit score. Since most of us
don't have perfect credit habits, we need to know where we stand and how to improve that critical number. Credit Karma helps on both counts. It keeps you up to date on that all-important credit score, but it also informs you of potential credit breaches and provides tools that help you find and secure the best credit card, loan, vehicle, and auto insurance deals. It does all of this for free, paying for itself by the recommendations it makes to you based on your overall credit profile.
Since we last reviewed Credit Karma, its subscriber base has grown to over 110 million—including roughly half of all US millennials, according to the company. It’s added new services since then, such as a no-fee checking account and other financial services. It also introduced the Relief Roadmap, a feature that provides links to local resources for consumers struggling with their finances. Credit Karma is good at what it does, but it’s not a full-service personal finance management solution like our Editors’ Choice picks for this year, Mint and Quicken Deluxe.
Credit Karma’s new Relief Roadmap provides links to resources for consumers struggling with their finances.
PROS
- Free
- Excellent user experience
- Explains rationale for credit scores and reports
- Suggests solutions for problem areas
- Pulls data from third-party services
CONS
- Intrusive financial product recommendations
- Only displays two credit scores
BOTTOM LINE
Credit Karma offers credit scores and reports, along with recommendations for financial products. It does a great job of helping you understand your credit and your credit options, though some may find the ads distracting.
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