What you need to know about Credit Karma
Are you wondering how Credit Karma works? Credit Karma is a free financial tracking service. It allows users to monitor and improve their credit rating. But can you trust Credit Karma’s accuracy when it’s free to use?
They help consumers better understand how their credit score is affected by their choices in their financial life and how to make improvements. But how accurate is Credit Karma and should you use it? Many people wonder about the answer to this question, and for good reason.
Let’s take an in-depth look at the accuracy of Credit Karma and whether it would be a useful service for you to use.
Is Karma Credit Accurate?
If you are unsure of the accuracy of Credit Karma, then don’t be too worried. They use information from the credit bureaus to assess your financial situation. The scores assigned to you within Credit Karma come from two of the three major credit bureaus.
While this might not be the same information a lender has access to, it should be fairly close most of the time. If the lender uses data to
In the other large office, there could be a big gap. You should use this information as a general guide, but be aware that the credit rating will vary depending on where the data is coming from.
Regardless of this potential problem, Credit Karma will allow you to track the changes you make to improve your credit score. This will help you see what you need to do to get a higher credit score which is very important when applying for a mortgage.
They can also alert you to changes in your score that can prevent you from being a victim of identity theft. Although the information provided is not perfect, customers seem to be very satisfied with the service and come back to it frequently.
Your credit score found in the Credit Karma system is taken from information provided by Equifax and TransUnion. They use the VantageScore system which is a collaboration between the three major credit bureaus. Consumers can understand this better because it is more transparent.
Despite this, you can still expect your credit score to be at least a little different from the score used when applying to a lender. Maintaining a good credit score is worth a goal because it affects us in so many ways.
Credit Karma Versus Your FICO Score
As they use the VantageScore system, your number on their site will naturally not be the same as your FICO score. Their score comes from two of the top three bureaus, so any inaccuracies will likely be due to the information the other bureau – Experian – has about you.
Comparing where you get credit score information is akin to comparing real estate appraisals. No two appraisers give your home the same value. If you are concerned about how Experian will affect your score, you can go directly to their site to get a report from them if you wish.
You can do this once a year for free, and you can check if it differs a lot from the score provided by Credit Karma.
Is using Credit Karma a good idea?
Some people are discouraged from using this service because of the information you need to provide. They will need information, including your social security number, so they can identify you and your credit history. Without these details, you cannot see your financial history.
While providing a social security number to a lender will result in a thorough investigation of your credit report, this is not the case here. Since the service only collects information and you are not trying to get a loan, using the service does not hurt your score.
There is, however, a small downside to using the service. Since the service is free, you can expect to see advertisements for financial products. It helps pay for the service provided, although it can be targeted at your financial situation as they know a lot about you.
How up to date is Credit Karma?
TransUnion information is updated once a week, so you can log in every week to check your progress. You can also review the evolution of your score over the months. If you log in weekly, you will be able to see issues before they directly affect you and gain a better understanding of why it happened.
Plus, you can be notified of changes to your credit score. They’ll send you an alert when something is reported to the credit bureaus, so you can make sure it’s correct. If you don’t recognize it, it could be an indication of a problem.
Does Your Credit Score Matter When Buying a Home?
When you apply for a mortgage with a lender, your credit score matters a lot. The amount of interest you owe and how easily you will be approved for a mortgage are affected by your credit score. When you get pre-approved for a mortgage, with a better score, you will normally pay less for the loan. Lenders reward those with the best credit scores with better terms and conditions on their loan products.
The service offered by Credit Karma can help you understand how to improve your score. With a better score, you’ll pay less each month and over the life of the loan. This could save you thousands of dollars on your mortgage. If someone wants to buy a home but has some credit issues that need to be addressed, I would definitely recommend Credit Karma as a financial tool to help them get on the right track!
Compare Credit Karma to Credit Sesame
Credit Sesame is another financial tracking service. Although with Sesame, they only have data from one credit bureau, so they likely won’t have the accuracy of Credit Karma.
There are other benefits to choosing Karma as well, with alerts to monitor your credit and protect your information. They can also help you prepare your taxes, as well as give you information on the value of your vehicle.
Should you register?
The service is certainly worth the price of admission since you don’t have to pay anything and only need to see a few ads. You will learn about the things you can do to improve your financial situation, especially when looking to apply for a mortgage.
If you ask the question, is Credit Karma correct? The answer has to be that it is up to a point, and certainly more than Credit Sesame. However, it would be best to treat it more as a guide and an indication of your financial health rather than an exact number.
If you are unsure of your credit score or want to know how to pay less interest on your future loans, the choice seems obvious. Credit Karma’s service won’t cost you anything, but it will educate you about your financial situation and help you make things better. Logging into Credit Karma to check your financial situation is very easy to do. After a while, and especially after seeing an improvement, you will probably enjoy logging into the site to see where you are at.
Final thoughts on using Credit Karma
If you’re planning on making some major purchases soon and your credit rating needs a boost, Credit Karma could be your answer. By getting sound and timely advice, you could put yourself in a much better position to save a significant amount of money.
Just keep in mind that the Credit Karma score is not the same as a FICO score. This does not mean that Credit Karma is not accurate for the information they provide. Hope you can use these tips on using Credit Karma wisely.
The previous article is from one of our external contributors. It does not represent Benzinga’s opinion and has not been edited.