Credit Karma
Like all savvy Rebel Readers, you need to stay on top of your credit score. It’s actually important in case you ever want to apply for housing, a loan, or a mortgage. Having a low credit score can really mess with your life plans and cost you money in the long run, so staying on top of it and removing any errors is just something you’ve gotta do.
The government has made this process fairly straight forward by allowing you one free credit report per year from each of the three credit reporting agencies. Check out the the Federal Trade Commission’s website on the topic for more info. (or visit AnnualCreditReport.com)
A New Approach to Credit Monitoring
But today’s post is about a different, more real-time way to keep track of and improve your credit score. It’s called Credit Karma, and it’s a different approach to credit monitoring. But before I dive into the details, let me explain what I think is dumb about the current 3-reporting company system.
- There are three companies you need to worry about
- They still use paper-mail to get you your credit report
- The reports don’t actually have your score!
- Less than 20% of Americans pull their credit reports annually
So clearly there’s some room for improvement. I’m not an expert on credit reporting, but I do know that any system that relies exclusively on paper-mail in the digital age is not one I care to deal with. So for the past few years I just dealt with it, I’d request my credit reports every once in a while, but even when I got them, I didn’t know what my score was.
Enter Credit Karma
When I first heard about an online service that knows your credit score and helps you improve it, I was immediately skeptical. After I did a bit of research, I found that they don’t require too much info from you. They basically pull info from the same sources that the 3 reporting companies pull from. They use this info to estimate your credit score from each agency and provide you with a great report about your credit history.
They also will let you know if there’s something fishy going on with your credit score. Since the alternative is waiting for up to a year to find out about mistakes, this is light years ahead. I’ve signed up about 8 months ago and I check in from time to time. It’s great to be able to check on it whenever you want to make sure it’s moving in the right direction, and it seems pretty secure to me.
Improving Your Credit Score
So not only will Credit Karma give you a “mock” score, they will also show you what is impacting your score, and ways to improve it. Here’s what they pointed out for me.
- Open Credit Card Utilization: A – Mine is only 2%, so no issues there
- Percent of On-Time Payments: A – I pay 100% of my credit card bills on time
- Average Age of Open Credit Lines: F – My average age of credit is only 1.5 yrs. There’s nothing I can do about this but wait…
- Hard Credit Inquiries: C – This one’s interesting. I didn’t realize this was an issue until I read about it on Credit Karma
- Debt to Income Ratio: A – Mine’s 1% so I don’t have to worry about this.
There’s some other metrics on there, but these are a good snapshot of what’s impacting my credit score. If I really want to improve my score I need to focus on keeping my lines of credit open for longer and not getting so many hard credit inquiries.
Credit Karma Dashboard
They’ve even got another cool little tool that lets you lay out a credit improvement strategy, and then they’ll tell you how much your score will change. I’d recommend it to anyone who wants to target the easiest ways to bump up their score.
My Overall Impression
After using Credit Karma for 8 months, it has made me a bit more sensitive to what types of things will impact my credit score, and it let’s me feel more comfortable that there aren’t any errors present on my credit reports.
Since it’s free, I don’t see a huge down side to signing up, and it might just teach you a thing or two about your credit, and how to change it going forward.
Readers, do you use Credit Karma? Do you get all three credit reports each year? Are you working on improving your credit?
I only recently started wanting to keep track of our credit scores. I’ve started using Credit Sesame which is pretty good, and our credit union (PSECU) also provides a service where they pull the primary account owner (in this case Mr. PoP’s) FICO score every month and keep track of it. Both services are free.
That credit union service sounds great. I’ve never actually seen my official FICO score. Do most banks do it? Or is a special perk from your credit union?
I don’t think it’s all that common. If we wanted the score from Wells Fargo we’d have to pay $13/mo to get it quarterly or $16/mo to get it monthly. Yet another reason to love our CU.
I like and use Credit Karma frequently, but it doesn’t represent anything “real”. I’ve stopped pulling my annual report, because my credit is good enough at this point where I don’t really care anymore. If CK gives me an alert I’ll check it out, but the free annualcreditreport.com BS is worthless.
Yea, I feel pretty comfortable that CK will tell me about anything fishy going on with my credit reports. For me, it was useful to figure out how to raise my credit score. Essentially all I need to do is have a longer credit history. Should be pretty easy.
I have used both Credit Karma and Credit Sesame… both are ok. I try to pull my credit report once every 4 months (rotate between the three) just to make sure nothing fishy is on there. Other than that I just let it ride.
That’s certainly the responsible way to do it. I don’t pull my credit reports frequently enough. What site do you use to pull your reports?
I use annualcreditreport.com and just keep track of which one I pulled and then rotate through them.
Thanks for the review on CK. If it’s free, how do they make their money (I guess through ads?).
Anna, you got it. They make money essentially the same way that Mint makes money. They have some general financial ads, but they also have a section that tries to push you towards specific cards based on your info/cookies. I don’t know that I’d trust their card suggestions for those reasons, but their credit improvement strategies seem pretty legit.
Great review on Credit Karma. It still befuddles me why so few people get their reports since they’re free. I would also like to see the scores on them, but I’ll take what I can get. We get ours every year as a practice. I am a Jr so I have to because my Dad’s info has popped up on my reports in the past.
Oh yea, that JR thing must be frustrating. I’m always amazed that my report is 100% accurate. It’s a little creepy how much they know about me…
That’s exactly the reason why my brother in law’s wife wouldn’t let my nephew be a Jr. Her brother was one and had terrible problems. It’s a shame that something like this can stop traditions.
I usually get my reports once every 4 months and rotate between the three bureaus.
Movements of financial capital are normally dependent on either credit or equity transfers. Credit is in turn dependent on the reputation or creditworthiness of the entity which takes responsibility for the funds. Credit is also traded in financial markets. The purest form is the credit default swap market, which is essentially a traded market in credit insurance. ,^
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