What you need to know about Credit Karma

The commercials are everywhere, GET YOUR FREE CREDIT SCORE!

Constant media commercials telling you to check your credit for free!


Did you ever hear the phrase, nothing in life is free or you get what you pay for?

As you’re mostly likely an adult over the age of 18 years old, I assume the answer is yes. So then the question is why would a company offer to give you the consumer a free credit score?

A quick little back history on credit karma that many of you probably do not know is they were sued a few years back by the federal trade commission which is why all of their tons and tons of commercials which seemed EVERYWHERE suddenly disappeared. They were sued due to glitches in their online app to keep consumers personal information secured and safe. This is of course a general explanation, if you want to read everything on it just google it or click this link from the federal trade commission https://www.ftc.gov/enforcement/cases-proceedings/132-3091/credit-karma-inc .

As the lawsuit was settled approximately about 2 years ago or less the commercials came back with a vengeance and everywhere, some actually twice an hour on some TV shows.


Why give something for free when everywhere else you have to pay for it?

It’s simple actually if you think about it, they SELL YOUR PERSONAL INFORMATION that you give to them in exchange for it.

Now of course this is my opinion and there is really no way to prove this as credit karma is a privately owned company. BUT let’s put some financially incentive logic behind my theory/opinion.

They get all of your updated personal information including of course your phone number and address. Collection agencies and banks that you owe money too can now sell that updated new information to those companies.

Think of the concept like a bank, ever wonder why they try to get you to open a checking account, savings account, money market account and other products?

The more products you have with them the harder it is and the more effort you have to expend if you decide to leave them as now there are many products you have to switch over.

That’s why the free credit score is offered. To entice you to help get you to sell their other products and get even more information on you to sell.

In addition any product you happen to partake in or buy they are financially compensated. So it’s kind of like how lending tree used to work (or still does as I have not paid attention to them in a while). They advertised apply with them and then sold those leads to mortgage banks and lenders; typically they sell the same number too many lenders. I know as I did this over a decade ago and got called about 17 times and even up to six months later.

Another reason…..

What they don’t tell you and you can’t seem to find ANYWHERE on their website until you are a member is they do not use the FICO scoring model they use the credit bureaus own created scoring model Vantage Score. This was created awhile back and the credit bureaus went to court with Fair Isaac and company over this and won.

Think there is a possibility that the credit bureaus may be offering the information for free to them or at an incredibly discounted price in order to push their scoring model? You would be naïve to think that is not somehow in the master plan.

Vantage score has undergone many changes since it started as initially in my opinion the credit bureaus were so arrogant as they thought they were going to change the scoring model system which originally was 500-990 (vantage score 1.0).

That backfired as it confused everyone when they tried using it so I’m not sure what made them think the way they did but fast forward approximately 7 years and they are at Vantage Score 3.0 which is the same as FICO scoring 300-850.

BUT the basics of how that score is calculated is different than FICO scores and just like with FICO scores each industry FICO scores will be different which can lead to even more confusion when people think they have scores that get get them approved

NOW, Experian for whatever reason chosen does not work with them however Equifax and Transunion does.



The credit bureaus collect data, that’s all they do, when a lender comes to them they have specific information they want and assign a number to it. So what’s important to a mortgage lender may not be as important to a car lender or credit card lender so that’s just one little reason why credit scores are different.

This was just a little public service announcement to give you some clarification in case you were ever wondering why you see so many credit karma ads and wondered why you take those scores to other lenders and they tell you something different.

As I tell everyone, I will tell you the truth of your situation whether you like it or now and if your credit file has the potential to improve to the goal you are trying to reach I will tell you that and discuss how it can be possible so call me now!

Of course as a disclaimer everything I am saying in this blog is mostly my educated credit opinion from being in the credit industry for over 12 years. This is my experience in dealing with this company and some of my research.    =)

Want to learn more about how credit actually works and how lenders view you? Buy my book “The Real World of Credit” on my website www.waynethecreditguy or go to www.BN.com and get the electronic version on Barnes and Nobles website!

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