Published August 14, 20194 min read
Over the last few years, I’ve seen a lot of advertising about the importance of knowing your credit score — and it’s true. Your credit score can help you qualify for a loan, get better credit cards, and receive cheaper insurance, among other things.
Credit Karma is a company that capitalizes on that three-digit number — they use your credit score to make product recommendations that can save you money. I decided to give Credit Karma a spin and see if it’s really a must-have app.
Instant access to your credit score and credit report
Access to your auto insurance score
Library of financial literacy articles
VantageScore 3.0 isn’t the only scoring model
Doesn’t include one credit bureau
Lots of product selling
Credit Karma is designed to help you understand personal finance. Its focal point is your credit score, a fluctuating three-digit number ranging from 300 to 850 that helps lenders determine how much money they should lend you and what interest rate to charge you. This number is based on a number of inputs including:
Number of credit accounts
On-time bill payment
Percentage of credit limit used
Dings such as collections, tax liens, bankruptcies or civil judgment
Frequency of credit applications
The higher your credit score, the more likely you’ll be able to get credit and the better the terms will be.
Credit Karma’s dashboard credit scores come from Transunion and Equifax. You can drill down on each score to see how you stack up in all of the factors and learn where you can improve. You can also access your credit report.
Other app features include:
Auto insurance scores
Unclaimed property searches
Financial education articles
Offers for credit cards and loans
Instant access to your credit score and credit report If you need quick access to your credit score and a brief credit report, Credit Karma is the right place to go. It also looks at how your spending behavior affects the different factors that go into creating your credit score, which gives you better insight on how to make improvements. (Here's how to read a credit report.)
Access to your auto insurance score The auto section is a really nice feature. It provides your insurance score, a number similar to your credit score that auto insurers may use to determine rates. Adding a car make and model lets you see its current value and whether it has any recalls.
For other types of insurance, like life insurance, you'll have to go through an application process to get your rating.
Identity monitoring Major information breaches are commonplace these days. Credit Karma will give you a heads up if your email address or account passwords are on the dark web. You’ll have the chance to change your information — hopefully before the worst happens.
Financial literacy articles Credit Karma does provide a lot of useful basic financial information that can make you smarter about personal finance.
VantageScore 3.0 isn’t the only scoring model The scoring model Credit Karma uses is just one of several in existence. If you’re hinging your financial future on Credit Karma’s numbers and apply for a loan or credit card with a bank that uses a different model, like a FICO score, you may not get the lending terms you expect.
Doesn’t include one credit bureau There are three major credit bureaus, but Credit Karma doesn’t include Experian’s data. This means you won’t necessarily get a full picture of your credit history and score, as each credit bureau calculates them a little differently.
Lots of product selling Credit Karma prides itself on being free, but it takes money to run the company. How do they do it? By referring credit card and loan applications. One of the most prominent things on my dashboard is an application for a credit card, and most sections have some sort of financial product to push. It’s an annoying necessity that can be a quick turn-off, particularly if you have a poor credit score.
It’s easy to get fixated on credit scores because it provides some insight into the health of your financial life. But if you’re not planning to borrow money anytime soon or don’t need to repair your credit, it’s may be pointless to have an app to continually monitor your credit score.
Want to learn your credit score? Several banks and credit card companies provide that information free of charge, and by law you’re entitled to a free credit report from each of the credit bureaus once a year, which can help you keep tabs on your data.
While the app does conveniently draw together some interesting financial information into one place, the constant product selling can make it difficult to discern what’s useful information and what’s an advertisement.
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