Everything You Need to Know About Credit Karma

Credit Karma can monitor your credit without impacting your credit score. Read this guide on Credit Karma to learn about their features, Credit Karma reviews, and more.
Written by Jacoba Bood
Reviewed by Kathleen Flear
Credit Karma is a free credit monitoring service that millions have trusted since 2007.
In addition to weekly credit reports, the company provides a range of free services, including tax preparation, credit card recommendations and reviews, and loan recommendations and applications.
Your credit score is one of the factors that can seriously affect your
car insurance
, loan rates, credit card opportunities, and more. Using Credit Karma can be a helpful way to help get your credit back on track.
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trustworthy insurance comparison shopping app
, has compiled all the information that you need to know about Credit Karma and whether this popular online service is right for you.
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What is Credit Karma?

Credit Karma is a service that offers free access to weekly credit reports as well as a range of other convenient cost-free loan and tax services.
Credit Karma takes your basic personal and financial information and then uses it to access your credit reports. It uses the VantageScore system to compile a weekly credit report that you can access for free at your leisure.
Using Credit Karma can be a great way to monitor your credit continually. It is particularly useful if you are planning on taking out a loan in the near future or want to improve your credit score to lock in better car insurance rates.
The credit card recommendations and reviews that are matched to your credit range will increase the likelihood that you will get approved for a card that works for you. You can also save time and energy when you use Credit Karma to apply for a loan or help you file your taxes for free.

The pros and cons of using Credit Karma

- Free lifetime reports
- Product recommendations may encourage spending
- Clean, intuitive user interface
- Uses Vantage Scores instead of FICO scores
- Access other free services like tax preparation

What services does Credit Karma offer?

In addition to accessing your credit score, you can benefit from these additional free-to-use services offered through Credit Karma.

Credit Karma credit monitoring

Credit Karma uses your credit report to provide your credit score. They also offer free credit monitoring.
Credit Karma will send alerts directly to your phone every time they notice what might be unusual activity on your credit score. Credit monitoring is increasingly vital as data breaches become more commonplace, so
monitoring your score for free
is a plus.
They will also use this alert system to let you know when the credit bureau reports credit cards or loan inquiries. They will even send you alerts to let you know when any applications are approved.
Credit Karma provides credit monitoring through two of the three major credit bureaus.

Credit Karma tax filing

In recent years, Credit Karma has also introduced a free tax filing service that can help you handle your state and federal taxes more efficiently.
One of the biggest draws to Credit Karma's tax service is that they will handle almost any type of return free of charge. This includes more complex schedule forms as well as self-employment and investment income reporting.
There are some exceptions to the tax services. You cannot use Credit Karma to file
New Mexico
state returns–although NM users can still benefit from the federal tax service.
However, if you are a part-year resident, you will have to look elsewhere for help filing your return.
Credit Karma’s tax filing service is admittedly not as user-friendly as paid services like TurboTax. You will also have to input all your information manually.
That said, the fact that Credit Karma’s tax services are free to use still makes them a popular choice for over one million Americans.

Credit Karma credit card and loan recommendations

Credit Karma also provides credit card and loan recommendations. The credit card recommendations come with convenient reviews that can help you make the right pick.
The credit card recommendations can be filtered according to categories like Student, Low-Interest, and Rewards. The services provide convenient user reviews on the products that they recommend.
Likewise, you can apply for various types of loans through Credit Karma, and using the app can save a lot of time compared to in-person bank appointments.
Just be warned that you will have to enter additional personal information to access the loan application service.
The bottom line is that if you are in the market for a new credit card or loan, the Credit Karma recommendation service will help you find the options that you are most likely to be approved for.
They work with most major credit card and loan providers so you can save time shopping around and minimize your risk of having your application rejected.
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FICO and Vantage credit scores: which is better?

Credit Karma uses the VantageScore credit rating system.
VantageScore and FICO are software programs that calculate credit ratings based on your credit history.
FICO is more established, but VantageScore has already been around since 2006. The program was developed by some of the top credit consumer agencies in the country.
A VantageScore is not necessarily better or worse than a FICO score—but it is calculated differently.
This means that your VantageScore rating will always be slightly different from your FICO score rating. However, your score should always be in the same range, no matter what system you are using.
If you have a "fair" VantageScore, you should also have a "fair" FICO score. Your Credit Karma VantageScore will not tell you anything about your specific FICO score, but it will give you a good idea of the range of that score.
Generally speaking, VantageScores are better suited to tracking the credit habits of people who use their credit relatively infrequently.
If you fall into this category, you can count on getting a relatively accurate picture of your credit score by using Credit Karma.
Regardless, any differences in the scores reported between the two systems are likely to be minor. The best way to monitor your credit progress is to pick one system and stick with it, so the fact that Credit Karma relies solely on the VantageScore system shouldn’t be a major issue.
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Is Credit Karma accurate?

For the most part—yes.
There are a few important things to note here, though.
The first is that Credit Karma only updates your scores once a week. As such, your Credit Karma report is not your actual credit report, but a week-by-week interpretation of this report.
In most cases, this won’t be a problem. However, if you are planning on applying for credit, there can be times when you might want to rely on a more precise system.
The second thing to keep in mind is that FICO scores are considered the industry standard. Most major credit lenders will look at your FICO score when determining your eligibility for a credit card or loan.
Credit Karma uses the VantageScore system, so you can expect your numbers on Credit Karma to look slightly different from what a potential lender is seeing. As mentioned above, the variance between your FICO and VantageScore is likely to be relatively insignificant.
In most cases, Credit Karma will be accurate enough for the average consumer.

Credit Karma limitations

Credit Karma can be a useful service for anybody wanting a convenient free way to monitor their credit or get their credit back on track. The app does have some potential limitations to keep in mind though.
You could end up borrowing more than saving
The recommendation services that Credit Karma provides are technically free, but you might end up investing more money for following them.
This means that the free recommendations that Credit Karma provides could be a downside for anybody hoping to get their credit on track in that it could encourage borrowing rather than saving.
Even if the recommendations don’t sway you, some users complain that the continual stream of recommendations is just plain annoying.
You might not need it
Can Credit Karma fix my credit? This is a common question asked about the service, and the answer is no. It can only help you monitor your credit.
The thing is that most people don’t actually need to continually monitor their credit.
You can access a free copy of your credit report directly through each of the three majors once every 12 months.
If you stagger these reports evenly, you can legally check your credit for free once every four months, which will be more than sufficient for some.
On top of that, some lenders and financial institutions will provide free access to your credit report when you subscribe to their services. If this is the case, using Credit Karma might be overkill.
However, if you are working toward applying for a home or
car loan
or improving your credit to help you get the best car insurance rates, having continual access to your credit score can help.
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Credit Karma reviews

Credit Karma drums up relatively favorable customer reviews, but not everybody agrees.
Common customer complaints include everything from inaccurate reports to excessive advertising to data breach issues. While these reports can’t be verified, you should consider that Credit Karma does rack up some severe complaints.
In all, though, the majority of Credit Karma reviews are positive. The fact that 60,000 million members subscribe to Credit Karma's lifetime services speaks to the company’s overall reliability.

How does Credit Karma make money?

Credit Karma makes their money by providing credit-based loans and credit card recommendations.
While you will have to provide personal information to allow access to your credit report, Credit Karma claims to have ample protection in place to protect your privacy. You do not need to worry about Credit Karma selling your private info.

Getting started with Credit Karma

Getting started with Credit Karma is simple.
When you visit the site or download the app, you will be asked to provide some personal information including your name, address, and your social identification number.
Most of this information is quite sensitive, so it is a good idea to take advantage of all the security features that the site offers. These include two-factor authentications for logins from alternate devices and security question screenings.
You have the option to turn your credit monitoring on and off as you so choose, but this feature will definitely come in handy for detecting any suspicious activity.
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Frequently asked questions

Will using Credit Karma hurt your credit?

No. The weekly credit inquiries that Credit Karma makes through VantageScore are considered soft inquiries, and soft inquiries will not hurt your credit.
By contrast, when you apply for a credit card or loan, this will be considered a hard inquiry. Your credit score will receive a ding for every hard inquiry, including loan and credit card applications made through Credit Karma.
There are legal limits on how much your credit score can be deducted through comparison shopping, but the VantageScore system used by Credit Karma does tend to log slightly higher inquiry deductions than FICO.

Is Credit Karma safe?

Credit Karma claims to go above and beyond to protect your data, and analysis of their security practices has generally proven this to be true.
For instance, Credit Karma
claims to rely
on bank-level 128-bit encryption in all of its data transmissions and maintains its own in-house security team who can readily respond to complaints.
The company has also willfully complied with external audits in the past and will even reward people for notifying the company of possible security vulnerabilities.

Will Credit Karma help me save on my insurance?

Even if you aren’t looking to apply for a loan or credit card, a less-than-desirable credit score can come with some profound long-term financial implications for your insurance rates.
Whether or not you use Credit Karma to manage your credit score, using the free insurance app
is the best way to get the best deal possible on your insurance.
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