Intro: Is Credit Karma Really Free?

Recently, there has been a lot of buzz over where consumers can receive a completely free credit report. If you have been wondering how to get your credit score for free, you may have already heard about one of these sites, which offers a completely free credit report, known as Credit Karma

People are asking many questions about this deal that seems too good to be true: Is Credit Karma really free? What strings are attached to a Credit free credit report? 

In an attempt to give you a leg up when it comes to managing your personal finances and credit score, we want to give you the facts on whether or not Credit Karma is free and what a free Karma credit report can tell you.

If you’ve been one of the many consumers trying to figure out where to go and how to get your credit score for free, keep reading to find out if Credit Karma is a good match for you.

credit free credit report

Image from Credit Karma

See Also: Is Credit Karma Legit? Is It a Scam? What You Should Know About Credit Karma

What Is Credit Karma?

With so many people wondering whether Credit Karma is free and how to get your credit score for free, some have forgotten the importance of their credit scores. Why should you take the time to look into your Credit free credit report? What good does knowing the details of your free credit report from Credit Karma do for you in the long run?

It’s no secret that banks and lenders typically pull your credit score before determining your eligibility for certain products that they offer. If you’re applying for a mortgage, an auto loan, or even just a new credit card, they want to know what your credit history is to make sure they are protecting their own interests in lending to you. Understanding the information in your free Karma credit report will help you to know which offers you qualify for.

is credit karma really free

Image Source: Credit Karma’s Free Report

Credit Karma understands how vital understanding the information enclosed within your free Credit Karma report can be. In fact, they claim that their business model is based around the idea of “put[ting] the power back in your hands” by assisting you with both comprehending and improving the score found on your Credit free credit score and report.

The main objective at Credit Karma is to put a Credit free credit report and score into the hands of consumers. But is Credit Karma free? The good news is that Credit Karma really is free for everyone to use, no subscription-based service necessary. How is it possible that Credit Karma is free? If they are a business, how can they possibly give away a free Karma credit score to everyone who registers on their site?

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Is Credit Karma Really Free?

If you want to understand how to get your credit score for free, it’s imperative that you understand the business model for Credit Karma and the alternative sites that also boast a completely free credit report and score.

The business model is pretty straightforward:

1. Register for their site to receive a free credit report and score. Each site that promises you a completely free credit report may offer you a different variation or compilation of reports from the three credit bureaus: Experian, TransUnion, and Equifax. Your free credit report will come from Transunion and Equifax on a weekly basis.

2. Take a look at Credit Karma’s recommendations. The company then examines your free Karma credit report and profile to suggest products and recommendations to save you money and to help improve your credit score. It may include a combination of products and loans that seem to fit with items you would be interested in based on your free Credit Karma report.

3. Credit Karma gets paid by the banks and lenders. Credit Karma is really free because it does not charge consumers for their free credit score. Instead, it receives its revenue stream directly from the banks and lenders each time one of their users opts for one of the products included in their recommendations.

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Credit Karma examines your current loan and credit card debt included in your free Credit Karma report and suggests additional products that would likely save you money. Beyond that, those products are advertised to you because you are not only likely to benefit from them, but you are also likely to be approved for them based on your free Karma credit report.

Just like other sites that tell you how to get your credit score for free, most people are wondering, is Credit Karma really free? Absolutely! At no point during the very short registration process will you be asked to enter any credit card information or payment information for your free credit report from Credit Karma. Your Karma credit score is free all the time, including the weekly updates that the site can offer.

In addition to a free credit report from Credit Karma, you can also opt to receive monitoring alerts for things like credit inquiries, late payments, new credit accounts or public records, changes to your personal information, or an improved payment history. Your Karma credit score is free, and so is their monitoring. Keep your credit score accurate by keeping a close eye on potential identity theft or misinformation listed in your free Credit Karma report.

With so many great features, it’s not hard to believe that consumers are asking questions like, is Credit Karma free? Who knew it could be so easy to learn how to get your credit score for free?

is credit karma free

Image from Credit Karma

What Does the Free Credit Karma Report Mean?

Not sure what the difference is between your free credit report and your free credit score? Is Credit Karma free for both credit reports and credit scores? When you register for Credit Karma, you will receive copies of both your free Karma credit score and your free Karma credit report. What’s the difference between the two of these documents?

  • Credit report: Your free Karma credit report will include any records that detail your credit history, including history of rent payments, records from lenders, utility companies, cell phone companies, and more. Your free credit report from Credit Karma comes from Equifax and TransUnion, though other sites with completely free credit reports may also include a report from Experian.
  • Credit score: Is Credit Karma free for credit scores? Yes, a credit score is simply a numerical value assigned to the information that was included in the free credit report from Experian and TransUnion. It is calculated via a mathematical formula with each type of information from your free credit report assigned a different value.

Without seeing or understanding your free credit report, it would be difficult to make sense of the information when you view your Karma credit score for free. If you’re wondering how the credit score you’ll receive from Credit Karma is calculated, take a look at this formula provided by Investopedia:

  • 32% payment history
  • 23% credit utilization
  • 15% credit balances
  • 13% depth of credit
  • 10% recent credit
  • 7% available credit

This formula applies to the VantageScore 3.0 credit score, the type provided with your Karma credit score for free. But what does that really mean?

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What Kind of Credit Score Is Your Free Karma Credit Score?

As we already covered, understanding your credit score is an important first step in determining which services you are eligible for from your bank or lender. It’s great that Credit Karma is free, but does it give you the information that you would need in your free credit score? We will take a look at the information provided to you in a Karma credit score for free to see how helpful it will be.

If you’ve spent much time researching how to get your credit score for free, you’ve likely come across the various types of credit scores you can receive. What sort of score is represented in your free Karma credit score? Is Credit Karma free for all of the types of credit scores?

Credit Karma is free only for your VantageScore 3.0 credit score, the only kind of score they offer. When you apply for new loans, products, or credit cards with your financial institution, they will most often pull your FICO score, not often provided on any of the completely free credit report sites. Based on data from 2014, most banks were still reviewing FICO scores (with 11 billion FICO score reports being examined versus just 1 billion of the VantageScore 3.0 reports).

A VantageScore 3.0 score included with your free credit report might not be exactly the same as your FICO score because they examine and assign different values to various aspects of your credit score. However, it will still give you a great place to start in understanding your financial health and “demystifying credit” so you can understand the different factors your lender is considering.

Is Credit Karma free for viewing your VantageScore 3.0 credit score? It is absolutely free to receive this information along with your free credit report. While it won’t be the same score the banks usually look at, you’ll still have a better idea of how to get your credit score for free.

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Conclusion: Is Credit Karma Really Free?

The biggest question still remains: is Credit Karma really free? The answer is resoundingly yes. There is no way for Credit Karma to charge you for your free Credit Karma report because the site never asks or requires any of your payment or billing information. It makes its money not from your free credit reports but from the money paid by banks and lenders when you opt in for products recommended by Credit Karma.

Understanding your free credit report from Credit Karma will give you an advantage when it comes to taking charge of your personal finances. Know what sort of interest rates and products you qualify for before you head into the bank. Now that you know how to get your credit score for free, what are you waiting for? Credit Karma is just a few clicks away, and so is your free credit report.

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