We all know that we should get our free credit reports each year, but those annual credit reports only give you the report, not your credit score. While the report is good for verifying the accuracy of your information being reported to credit agencies, most of us want to know our score to see how we stack up against others and to figure out what rates we can expect to receive on loans. This is where Credit Karma comes in. Credit Karma provides your TransRisk, VantageScore, and TransUnion Auto Insurance Risk Score. Along with these scores, Credit Karma also provides you Credit Report Card, which summarizes your credit report. And best of all… Credit Karma provides these all for free.
Going into this, you must know that CreditKarma is going to make its money somehow. Luckily, it’s not going to be from your wallet. Like Mint, CreditKarma makes its money by advertising offers tailored to your specifically. Since it knows your credit information, it will often pitch you credit cards to apply for or bank accounts that you can open. The ads on CreditKarma are much more intrusive and obvious than Mint’s, but if it helps them provide a free service, then I’m all for it.
The first thing you’ll probably be interested in after signing up is the credit score. The credit score given by CreditKarma isn’t the true credit score that banks will see. This is the TransRisk New Account Score from TransUnion. This is essentially TransUnion’s own proprietary calculation of your credit score. Most creditors use a FICO score, but this TransRisk score will be somewhat similar and gives you something to measure your improvement based on.
To see more details of your score you will need to head on over to the Credit Report Card. In here you’ll be able to drill down to the factors that are negatively impacting your score. For me, everything was a grade of A expect for:
CreditKarma is letting me know that I don’t have a long credit history (my oldest account is barely 4 years) and my total number of accounts is too low. Apparently to get an A in the total number of accounts I need 21+ accounts. I don’t really understand why that would impact my score since I already believe I have too many accounts.
All-in-all, CreditKarma is a neat, free tool that gives you a good indication of where your credit stands and allows you to track how it changes over time. For me, it’s stayed flat pretty much for the past six months. Its usefulness is limited because it does not give you a detailed picture to spot actual errors (i.e. it doesn’t list specific accounts on your report). Its more of a fun tool to check in with occasionally to see how you’re doing, as opposed to being useful on a consistent basis.
