You may be wondering, “Is Credit Karma a scam?” Scams are everywhere and sometimes it can be difficult to decipher when you’ve come across one.
The world wide web is so easily accessible to everyone that you must be extra careful when you enter any of your private information on a website.
This is particularly true with credit websites. When looking for help to build, track, and improve your credit score, you will have to give very personal information, including your social security number.
After Equifax’s breach in 2017, many consumers became extremely leery and Equifax stocks dove 30%, reports Forbes. American consumers quickly turned to an alternative site to find protection for their financial portfolios.
For many, Credit Karma became synonymous with financial safety. The site grew exponentially and as of a 2020 report released by Credit Karma, the company hosts over 100 million people across North America and the U.K.
Based on these numbers, one might assume that Credit Karma is not a scam in the least. Let’s take a closer look at all that Credit Karma has to offer consumers.
What is Credit Karma?
Credit Karma is a free credit monitoring system that allows users to access personal credit information. The site uses TransUnion and Equifax to pull your information.
In addition the site has a way to analyze your financial situation and offers different products and techniques to improve your scores and ultimately keep more of your money in your pocket.
The way they make money (and keep it free for users) is through third party compensation. So if a user enrolls in a service or purchases a product via Credit Karma suggestions, they will receive a payment from that business.
Consider Reading: 5 Ways to Improve Your Credit Score Fast!
Is Credit Karma a Bank?
Credit Karma is not a bank. They offer their banking services through MVB Bank, Inc. The two banking services they offer are savings and checking accounts.
Their checking is called Credit Karma Money Spend and their savings account is called Credit Karma Money Save. MVB Bank Inc. is FDIC backed so you don’t have to worry about your money.
In addition, the accounts are entirely free to use with no fees, except foreign currency exchanges that will accrue a one percent fee charged by Visa not Credit Karma.
Is Credit Karma a Legitimate Company?
Credit Karma is a legitimate company that has aided many consumers in improving their financial folder. Forbes has recognized the company and it succeeded so well that Intuit bought it in 2020.
Intuit allowed the company to keep its name and unique business structure as it had proven to be successful and needed no changes.
What Does Credit Karma Provide?
Credit Karma provides users with free access to their credit reports. They analyze your financial data so they can offer third party products and services to their customers to help them improve their score and financial situation.
In addition, Credit Karma also offers savings and checking accounts through their partner, MVB Bank Inc.
Is Credit Karma Accurate?
When posing the question, is Credit Karma accurate, you’re actually asking if the scores that Credit Karma shows you are accurate.
The company merely pulls your credit scores from the main credit bureaus, Equifax and TransUnion. If you find a difference in the scores, it could be as simple as outdated information, slow updates, or unreported information from creditors.
Sometimes you’ll wait two years to see a paid off claim be removed from your credit report.
How Does Credit Karma Calculate My Score?
Credit Karma is not a credit bureau so they don’t actually calculate anything you see on your report.
They take your credit scores from two main credit bureaus to give you a full picture of your financial status.
Consider Reading: Best Credit Cards of 2022
Is Using Credit Karma a Good Idea?
Credit Karma is an extremely useful tool for consumers who are responsible about keeping their credit report in check.
Even if you only use it for tracking your score, it is a good idea because it is free. You could pay upwards of $20 for every credit check through other websites.
Does Credit Karma Affect Credit Score?
Credit Karma does not affect your credit score. When you check your score, it is considered a ‘soft inquiry’ that will not make your score change.
Only if you have a ‘hard pull’, which is when you apply for financing of any sort, will you see a negative change in your score.
Should You Use Credit Karma?
Using Credit Karma is a personal decision based on your financial situation and goals. If you are planning on buying a house or applying for financial assistance on anything, you will benefit from Credit Karma.
Following your credit score and report allows you to manipulate your finances to get a better score and qualify for better interest rates on financial products.
Is There Any Downside to Using Credit Karma?
Credit Karma is pretty basic and can be used for just checking your score and report. However you may find that the advertisements for financial products and services are a bit much and can get annoying.
Other than that, most users are entirely content with Credit Karma.
Does Credit Karma Make Your Credit Worse?
Using Credit Karma does not make your credit score or report worse. It has absolutely no effect on your credit picture at all.
Because they only do a soft inquiry on your report, the score is not affected and because Credit Karma is a free monitoring service and not a lending service, it won’t show up on your report.
Credit Karma Reviews
A good practice to get into is checking consumer reviews on services and products, even if they are free.
Credit Karma needs very personal information to create your account so it is smart to check out what others are experiencing before signing up.
As with most companies, there is a mix of good and bad reviews of Credit Karma. Consumer Affairs is a reputable source for reviews so let’s see what consumers are saying about Credit Karma over on that site:
Credit Karma Complaints
There are numerous reports of Credit Karma shutting down or denying access to the Credit Karma Spend and Credit Karma Save accounts.
One Credit Karma user, Kelly of Charlotte, North Carolina left this review:
And she is not the only one to leave a report of accounts being closed.
Individuals in April of 2022 mostly have complaints that they can’t access their funds and when they try to contact Credit Karma the customer service is terrible.
One such customer, Doralynn of Albany, New York stated:
Credit Karma Praises
There are others who can’t praise Credit Karma enough for helping find a resolution to their credit score issues.
Luke of Boynton Beach, Florida claims he saw results within the first 11 days of using Credit Karma.
And Nathan of Liberal, Kansas mentions his success as well, marking Credit Karma with five starts on Consumer Affairs:
For an overall rating on Consumer Affairs, Credit Karma is 3.7 stars out of 5 starts after 350 reviews are recorded.
Can Credit Karma be Hacked?
As with everything on the world wide web, Credit Karma can be hacked. Most financial sites know that hackers will try to infiltrate their firewalls so they take extra care to prevent that from happening.
Since their founding in 2007, Credit Karma has not been hacked.
In early 2017 there was a mention of some data being accessed, but it was due to technical issues and was not a hacker trying to access the company’s files.
Does Credit Karma Sell Your Information?
According to their website, Credit Karma never sells your information. They only make money off users if they click through and purchase or enroll in a suggested financial service.
They do not force anyone to participate in their advertisers and won’t ever make you pay for their services.
In Conclusion: Is Credit Karma a Scam?
After reviewing everything that Credit Karma is and does, you can see that it is not a scam.
The company merely presents users with their credit report and score and offers information and products or approaches on how they can improve their financial situation.
They don’t sell your information and they don’t force you into partnerships with financial institutions.
Their recent addition of the two banking accounts seem to be questionable in the Consumer Affairs reviews but those are an optional service provided by Credit Karma in partnership with MVB Bank Inc.
They are also brand new services and may need some time to operate smoothly.
If you want to use Credit Karma as it was originally intended, to monitor your score and report regularly, it is a wonderful tool.
The other optional services they suggest are entirely up to you and what you want to do with your financial portfolio and should be researched before you consider enrolling in them.