Credit Scores
Updated on December 23, 2023
Written by
Frank Gogol
Written by
Frank Gogol
I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.
See all posts Frank Gogol
Reviewed by
Rohit Mittal
Rohit Mittal is the co-founder and CEO of Stilt. Rohit has extensive experience in credit risk analytics and data science. He spent years building credit risk and fraud models for top U.S. banks. In his current role, he defines the overall business strategy, leads debt and capital fundraising efforts, leads product development, and leads other customer-related aspects for the company. Stilt is backed by Y Combinator and has raised a total of $275M in debt and equity funding to date.
See all posts Rohit Mittal
At a Glance
- Credit Karma offers a free credit score service to help users improve their financial situation.
- Users can access their credit reports and VantageScores by providing personal information, such as name and last four digits of the Social Security Number.
- The information is sourced from Equifax and TransUnion, providing accurate insights into credit standing.
- Credit Karma allows users to track progress, set up alerts for credit changes, and prevent identity theft, updating every 7 days.
Credit Karma is very popular as a service, as it offers free credit reports and free credit scores. But that also makes people ask themselves “How accurate is Credit Karma?” If you’re in the same boat and want to find out more about the accuracy of the service, this article will tell you everything you need to know.
In This Article
What Is Credit Karma?
Credit Karma is a credit score service that is known for offering free credit reports and scores. But although this is pretty much what it offers, the website classifies itself rather as a way to help people build a much better financial situation in the future.
Using Credit Karma is possible if you give them some of your personal information. No need to worry – they will not ask for all of your data, but rather some basic information meant to identify you. If you give them your name and your Social Security Number’s last four digits, you can start using Credit Karma.
If you give it your permission, it will also be able to access your credit reports, as well as create a VantageScore.
Is Credit Karma Accurate?
Many people who use Credit Karma are wondering whether it is accurate or not. Since it is a free service, people want to make sure they are actually getting accurate results.
Well, the credit score and report information on Credit Karma is accurate, as two of the three credit agencies are reporting it. Equifax and TransUnion are the ones giving the reports and scores. Credit Karma also offers VantageScores, but they are separate from the other two credit bureaus. Therefore, people can have peace of mind that the scores are just as accurate as they are expected to be from a free service.
While scores are accurate for the most part, there are also situations when they are not perfect. In fact, the score may be off sometimes, which is why apart from Credit Karma, you should also have a credit report done by your financer or a credit agency. After all, you need to ensure you have the right credit score if you want to get a loan, buy a car, or get a new house.
Credit Karma is not a credit bureau, so the information they collect isn’t from creditors. Instead, the reports and scores show your credit information based on the report of the two credit bureaus involved.
Credit Karma allows users to track their progress, and see whether there are any credit changes, which makes everything better. This is probably the best way to use Credit Karma. You can set up alerts – so, whenever there are any changes to your credit score or report, you will be notified. It is something very useful and might even prevent identity theft.
While it is not always the most accurate, Credit Karma still has enough accuracy that makes users return to it. Over time, the scores they provide have become better and more trustworthy.
How Does Credit Karma Compare to Actual Credit Scores?
A lot of people also wonder how Credit Karma compares to actual credit scores. Well, Credit Karma generates credit reports from two of the three credit report agencies that are at the top. As already mentioned, they create these credit reports through agencies like Equifax and TransUnion. The score reported from these two is very close, and even if the points will be a bit off, they won’t be by much.
The only top credit agency that does not report to Credit Karma is Experian. This is basically where the few points that are off are coming from. This relates to the actual credit or FICO score, so that is why it is affected.
Who Should Use Credit Karma?
There are a lot of people who are too scared to use Credit Karma because they do not want to give their personal information. One of the pieces of information you need when signing up on Credit Karma is the Social Security Number. Not everyone is comfortable with giving these details.
However, it’s a necessary piece of information if you want to track your credit history and score. If you wish to find out your credit score and monitor it in order to know when you can buy a house or a car, then Credit Karma is the way to go.
Even if you don’t give your information to Credit Karma, when you want to buy a new home, you will have to give the mortgage lender your Social Security Number. This will allow him/her to check your credit score. But when that happens, there will be a hard inquiry on your credit report, which will bring down your credit score by a bit.
On the other hand, Credit Karma doesn’t end up in a hard inquiry on your report. It is only there to gather information and let you monitor your credit.
So, Credit Karma is a good alternative for first-time homebuyers or just anyone who wants to keep an eye on their credit before they borrow a loan or make a great purchase. You should consider this service and sign up in order to monitor your credit score. On top of allowing you to check your score, Credit Karma also lets you learn more about credit scores, what impacts them and how to improve them.
You should just bear in mind that this service will sometimes give you advertisem*nts for things such as credit cards or others, as this is a way for Credit Karma to make some money.
How Often Does Credit Karma Update?
Credit Karma will show updates from TransUnion every 7 days – so, if you log into your account once a week, then you will see how your credit score looks. There are situations when there are no updates, but there’s no need to worry in this regard, as it may take up to 30 days for reports to come from banks. Afterward, it takes about two other weeks until there are any additional edits made by the lending institutions.
The fact that there is an update every 7 days is great because you can keep a close eye on your credit at all times and know where you’re standing. Not only will you see the credit score you have at the moment, but also the credit score from the past weeks, months, etc. If there are any problems that might drag your score down, then you will notice them before they get even worse.
Credit Karma will also let you know when the score was last updated. Moreover, if there are any problems with your credit score, the app will alert you.
Read More
- How to Remove Paid Collections from a Credit Report
- How to Get Approved for a Cell Phone with Bad Credit
- How Many Points Will My Credit Score Increase When I Pay Off Collections?
- How to Check Your Credit Score Without an SSN
- How to Remove Late Payments from a Credit Report
- Why Did My Credit Score Go Down When Nothing Changed?
- Can You Be Denied a Job Because of Bad Credit?
Conclusion
Credit Karmais a great alternative for people who want to check their credit score without having a hard inquiry on their credit. While the score may be a little off sometimes due to the absence of Experian’s reports, for the most part, it is accurate. As such, this makes Credit Karma an amazing way to keep track of your credit and lets you fix any issues before they become worse.
Frequently Asked Questions (FAQ)
What is Credit Karma?
Credit Karma is a personal finance company that offers free credit scores, reports, and insights to consumers. It provides information based on your credit profile from TransUnion and Equifax, two of the three major credit bureaus.
How Accurate Are the Credit Scores Provided by Credit Karma?
The credit scores provided by Credit Karma are generally accurate and give a good indication of your credit health. However, Credit Karma uses the VantageScore model, which may differ slightly from the FICO scores lenders often use.
What is the Difference Between VantageScore and FICO?
VantageScore and FICO are two different credit scoring models. While they both assess creditworthiness, they use slightly different criteria and calculations, leading to potential variations in the scores they produce.
Can I Rely on Credit Karma for Major Financial Decisions?
Credit Karma can be a useful tool for monitoring your credit, but for major financial decisions, it’s advisable to check your FICO score and consider getting a credit report directly from the credit bureaus.
How Often is Credit Karma Updated?
Credit Karma typically updates its credit scores and reports weekly. This frequency helps you stay up-to-date with changes in your credit profile.
Does Using Credit Karma Affect My Credit Score?
No, using Credit Karma does not affect your credit score. It conducts a soft inquiry, which is a non-impactful review of your credit.
Is Credit Karma Free to Use?
Yes, Credit Karma is free to use. It generates revenue through targeted advertising based on your credit profile and financial behavior.
How Does Credit Karma Secure My Personal Information?
Credit Karma employs various security measures, including encryption and two-factor authentication, to protect users’ personal information.
Can Credit Karma Help Me Improve My Credit Score?
Credit Karma provides insights and recommendations based on your credit profile that can help you understand factors affecting your credit score and take steps to improve it.
What Should I Do If I Find Inaccuracies in My Credit Karma Report?
If you find inaccuracies in your Credit Karma report, you should dispute the errors directly with the relevant credit bureau, either TransUnion or Equifax.
Frank Gogol
I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.
See author's posts
As an enthusiast deeply immersed in the realms of finance and credit, I bring a wealth of knowledge to the table, having closely followed and analyzed the intricate dynamics of credit scores and financial services. My expertise is underscored by a commitment to empowering individuals with information, a sentiment mirrored by prominent figures in the field. The Stilt Blog, a platform where I share insights, has gained recognition and been featured in esteemed publications like Forbes, TechCrunch, and VentureBeat.
The content I present is not only informed by a comprehensive understanding of financial intricacies but also benefits from the critical eye of Rohit Mittal, a co-founder and CEO of Stilt, whose extensive experience in credit risk analytics and data science adds a layer of depth and credibility to the information shared.
Now, delving into the specific content regarding Credit Karma's credit score service, it's crucial to understand the key concepts discussed in the article:
1. Credit Karma Overview
Credit Karma is a prominent player in the credit score services arena. It positions itself not just as a provider of credit reports and scores but as a tool to assist individuals in building a better financial future.
2. Accessing Credit Reports and VantageScores
Users can access their credit reports and VantageScores by providing personal information, such as their name and the last four digits of their Social Security Number. The information is sourced from Equifax and TransUnion, two major credit agencies, ensuring accuracy in credit standing insights.
3. Accuracy of Credit Karma
The article addresses a common concern: the accuracy of Credit Karma's credit score information. It assures users that the credit score and report information on Credit Karma is accurate, backed by reports from Equifax and TransUnion. However, it emphasizes the need for occasional cross-verification with credit reports from other sources.
4. Comparison with Actual Credit Scores
The article provides insights into how Credit Karma compares to actual credit scores. It mentions that Credit Karma generates credit reports from Equifax and TransUnion, with Experian being the exception. This discrepancy may lead to minor variations in the credit score, especially in the context of FICO scores.
5. Target Audience for Credit Karma
The article addresses concerns about sharing personal information, asserting that Credit Karma is a valuable tool for those who want to monitor their credit without undergoing a hard inquiry. It is particularly recommended for first-time homebuyers or anyone looking to keep a close eye on their credit before significant financial decisions.
6. Update Frequency
Credit Karma updates credit scores from TransUnion every 7 days, allowing users to track their progress consistently. The article highlights the importance of regular monitoring and alerts to detect any changes in credit scores promptly.
7. Conclusion and FAQs
The conclusion reinforces Credit Karma's usefulness, especially for monitoring credit without impacting the credit score. It acknowledges the occasional minor discrepancies but emphasizes the service's reliability for proactive credit management.
The Frequently Asked Questions (FAQ) section covers additional queries users might have, addressing topics such as the accuracy of Credit Karma scores, the difference between VantageScore and FICO, the impact on credit scores, and steps to take if inaccuracies are found.
In summary, the article provides a comprehensive overview of Credit Karma, addressing its accuracy, user base, and update frequency, all while offering practical insights for individuals navigating the complex landscape of credit.
