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 pieces of financial information, especially when buying a home.
For a long time now, creditors and lenders have used your credit score to determine whether they would lend to you and what kind of 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 100 million members as of 2021, all of which 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, it is essential to get your financial house in order far in advance of 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. Credit Karma can be your financial “right-hand man” in your home buying journey.
Once you are ready to get started, 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.
Let’s take a deep dive into what you need to know about Credit Karma and what it offers:
Credit Karma – An Overview
An Easy Way to Get Your Credit Report
The three major credit reporting bureaus, TransUnion, Equifax, and Experian, are required to give you a free credit report once a year by federal law. 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 actual credit score.
Since you need to know your credit score to get an idea of where you stand when applying for credit, the reports’ lack of a credit score is problematic. The reporting agency provided a less than an adequate solution – offering to sell you your score for a steep price.
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 having to wait once a year to check your reports or being price gouged to get your actual credit score, you could sign up for Credit Karma and get what you needed. 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 Credit Karma’s Origin?
Credit Karma is a multinational company founded by Kenneth Lin, Ryan Marciano, and Nichole Mustard. 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 so many companies in this industry, Credit Karma seems to be 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, what areas of your credit report are problematic, and give you recommendations on how to correct issues and improve your credit steadily over time.
Barring coming into a lot of money suddenly 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 is Credit Karma? This question comes up all the time because there are different credit scoring models and different credit scoring bureaus.
Credit Karma’s accuracy ends up being questioned when consumers see their score on the site and then 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 you.
The company does not use the same credit information as the FICO model, and you need to keep that in mind.
No FICO Scores
Your FICO score is quite essential for certain situations – mortgage lenders look at your FICO score to decide whether they will lend to you and what kind of terms they will offer. The FICO score is considered the industry standard.
The score also helps lenders to determine the likelihood you will pay the loan back and not end up having to 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.
A bit of trivia – the Fair Issac Corporation created fico scores in the 1960s.
Credit Karma does not offer FICO scores to its members, something that 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 Credit Karma Having an Accurate Credit Score
“It’s important to keep in mind 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 are different than 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 useful.
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 other 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 the way their credit score changes over time and offer them ways to improve their score and financial health over time.
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. Getting incorrect information fixed 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 own scoring model – the model they use to weigh the importance of different aspects of your credit. Since they use different models, they can come up with 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 Does Credit Karma Update?
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 continue to change over time as more pieces of data arrive at each of the credit bureaus. Transunion credit reports being updated more frequently is a good thing. The more updated your personal data, the better.
Pros and Cons of Credit Karma
Advantages of Credit Karma
- 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 great suggestions for fixing problem areas with your credit.
- The company pulls its data from third-party resources.
Disadvantages of Credit Karma
- You will get intrusive financial recommendations.
- It only will show you two of your credit scores.
- You can’t change the auto-logout setting.
Easy to Login and Use The Site
Signing up to use their financial tool is straightforward and only takes a couple of minutes to get started. You will need to give them your name and address along with a couple of 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.
A Credit Karma Account Has Security Measures
For example, you can get a texted code to verify your identity with two-factor authentication if you plan on logging in from different devices.
You will be able to turn credit and identity monitoring on or off. You will also be able to 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, you can do so by calling their phone number at 1-888-909-8872. They are available to 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.
Using The Credit Karma 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 will have the ability to receive credit alerts if the company gets a crucial change to your credit reports from either 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 Credit Karma Tax?
When most people think of Credit Karma, it is because of their credit score monitoring and improvement tools. Many people have never heard of Credit Karma tax until they get in and start using the site.
Like their credit scoring tools, Credit Karma tax is free to use. Like 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 who have a fairly straightforward tax situation.
With any free software, it’s not going to be best for everyone, but the tax software can satisfy a significant number of people.
One thing worth noting is 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
If you love the convenience and don’t have a complicated return, Credit Karma has a Tax App you can use right from your phone. When you download the app, you can complete most of the tax return tasks from your cellphone.
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.
If you need some assistance with using the software, they provide chat support only during tax season.
Since Credit Karma Tax is free, it is an excellent addition to all the other services they provide.
What is Credit Karma Savings?
Another feature the company offers is what’s called Credit Karma Savings or their trademarked name, Credit Karma Money. Like it sounds, the company offers a high-yielding saving 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 they offer higher interest rates than traditional savings accounts. At the moment, they are advertising rates that are six times higher than the national average.
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 Credit Karma Make Money?
Since the company does not charge its members for the free credit reports and free score it offers, or for all the targeted advice they give members, they have to make their money some other way. They are quite 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 the information you provide 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 you are likely to be approved for 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 overall idea is that their business model can create a situation where everyone wins – members get financial services they need, lenders get customers, and the company makes some money from the transactions.
The site offers numerous tools to help your personal 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 as well.
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 two levels – Pro and Platinum, which are $15.95 and $19.95, respectively. Some of the 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 and social security and ID monitoring.
Frequently Asked Questions About Credit Karma
- 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 comes into question 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 counts as a “soft” inquiry that is not sent to the credit bureaus. Only “hard” inquiries, such as a lender’s credit check when you apply for a mortgage, get 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 right from your phone if you download the tax app.
- Is Credit Karma free? – Yes. They do not charge their customers fees. As previously mentioned, the company makes its 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 use 128-bit encryption to protect data transmission, which is almost impossible to crack.
- Where is the Credit Karma login? – You can find the Credit Karma login in the upper right-hand corner of the home page.
- How to contact Credit Karma? – 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.
Credit Karma and Buying a Home
If you plan on buying a home, your credit score will play a big part in the process. 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 with.
You can wind up paying far more for a home with a low credit score than you will with 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 that lenders will look at when they process your application, but that does not mean that 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 improve your credit, and you can expect your FICO score to grow as a result.
Having a good credit score is beneficial for most aspects of your financial life. Getting the best credit can save you thousands of dollars when getting a mortgage, personal loans, or credit cards.
Buying a house with bad credit can be far more challenging
Credit Karma Video
Please have a look at the quick video of one of Credit Karma’s users sharing their experience using the site.
Tips to Increase Your Credit Score
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:
- Always pay your bills on time – one of the most vital aspects from a lender’s standpoint is to see how probable it is 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.
- Pay off your debts – pretty much common sense. Lenders don’t want to see that you owe other creditors lots of money. If you have an auto loan with a significant balance, think about paying it down first.
- Keep balances low on your credit cards – one of the factors that can significantly impact your credit score is what’s know as your credit utilization ratio. The ratio is calculated by adding all of your credit card balances and dividing that amount by your total credit limit. For example, if you usually charge about $3,000 each month 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 can get it, the better. Having high balances is not a good thing when trying to procure loans, especially a home purchase.
- Don’t open new credit accounts unnecessarily – having mortgage credit cards is generally not a good thing. You will be just tempting yourself to have more open credit. There will be more inquiries against your credit report by having new accounts as well, which isn’t ideal.
- Don’t close credit cards your 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.
- Avoid applying for new credit – getting another new credit card can increase your overall credit limit. Still, the act of 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 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 scoring. As mentioned above, when you will purchase a home, vigorously comb your credit report for mistakes. 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 cremes of the crop. 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 Tweet
Work 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 put in enough effort to choose the right mortgage company.
The mistake that is often made is just focusing on the interest rate offered and not the loan’s total cost.
Lenders can make a particular loan product look enticing by the advertised rate they are offering. Sometimes the cost, however, when compared to other loan programs, is not the best.
At the initial stages of procuring financing, make sure you ask the lenders lots of questions. Getting the answers you desire will go a long way towards being happy in the long term.
As a first-timer, there are a plethora of exceptional first-time buyer loan products available to choose from. Whether you are looking for a low or no down payment loan, you’ll have plenty of outstanding choices.
Just as essential as finding the right fit with a mortgage company is finding a real estate agent you find dependable and trustworthy.
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 know 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 lots of questions. You must understand the process, especially when it comes to getting a mortgage. See what most people like to ask and the appropriate answers.
Use these additional mortgage resources to get helpful advice before buying your next house.
Credit Karma Reviews
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 on a daily basis.
Consumer affairs offer some helpful reviews for you to look at about the services offered.
One of the most crucial parts of becoming a homeowner is getting your finances squared away well in advance of your purchase. Your credit score should always be a work in progress when you don’t have the best scores.
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 the same thing as FICO scores. Don’t think that Credit Karma accuracy is off because of this fact.
Hopefully, you have found this guide on using Credit Karma to be helpful.
About the author: The above Real Estate information on is Credit Karma accurate and how it works was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at email@example.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 34+ years.
Are you thinking of selling your home? I have a passion for Real Estate and love to share 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.