Credit Karma: What It Is & How It Works
Personal finance is one matter that should never be taken lightly. Informed consumers understand that their credit score has a huge impact on their ability to get approved for credit cards and a mortgage.
They are also aware that their credit score will determine if they are able to certain jobs. This is the main reason why you should review your credit report and credit score every quarter. This will help you check for inaccuracies and find methods that can improve your credit rating.
Many consumers gain access to their credit report, credit scores, and credit monitoring services through the primary credit reporting agencies (Equifax, TransUnion, and Experian). This approach can help you manage your credit, but it can be expensive. Fortunately, you can turn to Credit Karma. Credit Karma is an effective cost-free option that you cannot afford to ignore.
What Is Credit Karma?
Credit Karma, based in San Francisco, was founded in 2007. Credit Karma is a website that gives you free access to your auto insurance score (rendered by TransUnion), your credit score (also rendered by TransUnion), and the VantageScore (rendered by an independent company). You can choose any of the following offers from the site: credit card, banking, mortgage, and personal loans. You also have access to the blog, discussion forum, and finance tools.
How Does It Work?
It is imperative to point out that Credit Karma’s services are free. Creating an account at Credit Karma requires minimal information, and their services will not affect your credit score. After logging-in, you will be able to see your updated credit score, look at earlier scores, and review offers designed to raise your credit score. Credit Karma’s site lay-out makes it extremely easy for you to explore the website with ease.
Main Features On Credit Karma’s Website
Credit Report Card – Besides gaining free access your credit score, you will get a credit report card. The credit report card is broken-down into the following sections: an overall grade, usage of open credit cards, percentage of on-time payments, age of open credit lines, hard credit inquiries, total accounts, debt-to-income ratio, and total debt. You are given a grade on each section. The grades will point out the strengths and weaknesses of your credit report.
Credit Compare – The credit compare feature gives you an opportunity to see how you compare to other Credit Karma members, consumers in your age range, and consumers in your area.
Credit Score Simulator – The credit score simulator will give you an estimate of what could happen to your credit score if you get a new credit card or a new loan. The credit score simulator will also give you a preview of how your credit score could change if you increase your credit line or close an old account.
Why Credit Karma Offers Free Services
It is natural for one to be skeptical of free credit related services. Why is Credit Karma offering their services for free? What is their bottom line? These are the questions that normally surface when one is thinking about signing-up.
Credit Karma has been transparent about their aim and operations. Christina Ra, former spokesman for Credit Karma, stated the following, “The company was founded with the belief that consumers should have access to their data for free.” Credit Karma’s services are designed to help consumers understand their financial health.
Does Credit Karma Profit from Their Free Services?
It is worth mentioning that Credit Karma is not a charity. This company makes it money from targeted advertising. Credit Karma’s advertising is based upon their member’s financial habits. For example, if you have an exceptional credit rating, banks are willing to spend significant money to target you with their credit cards and loans.
This form of targeted marketing is cost-effective when compared to running generic ads to millions of consumers that may not qualify for their products. Credit Karma makes money when you take advantage of the opportunities listed on the site.
Final Thoughts
Finance is a serious matter that consumers cannot afford to overlook. Poor credit can make it extremely difficult for one to get approved for credit cards and a mortgage. Credit Karma is a personal finance website that helps consumers gain free access to their credit reports. Members can monitor their credit report and use the site’s tools to improve their credit score. This exceptional resource is used by millions of consumers around the country.
Credit Karma helps members learn how to master personal finance. Their revenue comes directly from advertisers. This can be viewed as a win-win situation for everyone.