Monday, April 6, 2009

CreditKarma: Never Pay for Your Credit Score Again!

I feel like a moron. Just two weeks ago I paid $14.95 for three-month access to my credit score. Let me tell you a little story about how this began:

My neighbor, four doors down, has the same name as me, with the minor difference of a different middle initial. Her middle initial, happens to be that of my maiden name. Because I hyphenated my last names for the first few years after I was married, I have a registered “credit alias” that is exactly the same as her name, and a mailing address just a few digits off.

That really isn’t too much of a problem, except that because our addresses our so similar, and she doesn’t pay her bills, her collections accounts arrive on my credit score routinely.

Four more of these recently appeared on my credit report and were discovered by my mortgage bank during my refinance. I shot off another letter to TransUnion last week hoping to intervene before my rate-lock was threatened.

I’ve got to say, I’m pretty tired of paying for my own credit score. Yes, you can get a credit report free annually, (just one) but it’s far more helpful in a situation like mine to check it more frequently than that.

Finovate 2009 presenter, CreditKarma may be the solution people like me are looking for. It provides constant, free access to your credit score as well as some other features.

You can see how your credit score stacks up to those in your age range, state, or even email domain. You can also use their calculator system to see how adjustments in your financial situation would affect your score in theory. Would it help or hurt you to close a high-interest account, extend your credit limit, or even file for bankruptcy? I was surprised to know that paying off my credit card balance entirely will actually hurt my score, and that optimally I should be carrying some credit card debt. (Thanks anyway, but I’ll still be going debt-free). There’s a screen to view your long-term credit score over time, which will be very helpful for tracking identity fraud or excessive credit inquiries (which cost you points).

The site is free because of sponsorship (think Mint), but I found the sponsorship to be rather oppressive and cluttering. However, not so much that I won’t be using CreditKarma. Also, be reassured, that they fund the site through ad partnership only, not through selling your personal info.

There are some features that I especially like including a credit card debt calculator which allows you to either enter your projected monthly payment and calculate a payoff date, or enter a date and it will show you your estimated monthly payments. Adding a little extra value to this calculation is their friendly nudge that shows you how much you can cut your payoff time by paying just a little bit more.

At this time, CreditKarma is only showing credit scores from TransUnion, and not Experian and Equifax, but in my experience, TransUnion’s scores have always been the lowest (They’ve also been the only ones routinely confusing my neighbor’s accounts with mine).

Because CreditKarma is requesting your score on your behalf rather than for a lender, your credit score won’t be affected by the inquiry.

Jessica Ward is a freelance writer and blogger located in Seattle, WA. She blogs on finance, credit, family and food at


Lev said...

Do they provide the FICO score? TransUnion has its own formula but most lenders use FICO, as far as I know.


Tom said...

Do you know if you can still get 10% off Lending Club fees through CreditKarma?

Tom said...

Also, on a closely related topic I think Matt's article on credit reports is worth a read. He describes how you can obtain a free credit report, dispute a claim, and why it is important to have good credit. (This is all before CreditKarma.)

How to get a free credit report

JessicaW said...

It's the transunion score, but I've generally found TransUnion's score to be similar to my other scores--except TransUnion is the only one that seems to be perpetuating the problem with confusing my neighbor and I.

Lev said...

Yes, I understand it's from TransUnion. I am asking whether they use their own formula or FICO's. I.e. when lenders tell you they need credit score of 720 they most likely mean score calculated using the FICO's formula, not TransUnion's. FICO provides the formula, credit agencies provide the data. I checked and FICO is not mentioned anywhere. So it's probably a useful tool to monitor how your score changes but to make sure you qualify for a low mortgage rate you would need to get your FICO scores.

Tom said...

I just logged in to check if the 10% off Lending Club fees is still offered.

The offer is still online and looks valid but the fine print reads:

"Lending Club Loans from 7.88%. Get 10% off fees and a free t-shirt. ...This Offer is available exclusively to Credit Karma borrowers. Borrower pays 0.75%-2% of the loan amount as origination fees. 10% off will be reimbursed to the borrower once the loan issues. Free t-shirt gift is a limited offer. Gift will be mailed to borrower as soon as their loan issues. Loan listing must be submitted before Dec 31, 2008."

Tom said...

It would be nice if you can search CreditKarma offers instead of just viewing by category. I'm looking for mortgage offers but don't see any...

Tom said...

Okay...I see the mortgage offers now. They use Bankrate's mortgage rate finder tool.

matthew said...

Credit Karma's credit score is what is known as a FAKO, not a true credit score or FICO. You can only get real credit "scores" via You can get your EQ or your TU credit scores, but not EX, as EX has decided not to do business with them anymore. You cannot get your EX credit score as a consumer unless a lending institution will tell you what the value is.

Sorry to burst your bubble, but your Credit Karma score is meaningless.

JessicaW said...

Matthew, this is the Transunion Score, which is not that same as a FICO score. I subscribe to a all-bureau credit bureau monitoring service due to an ongoing case of identity confusion (I have a neighbor with a similar name, which causes all kinds of credit bureau confusion) This Credit Karma score exactly matches my Transunion score, which is within a couple of digits of my FICO score.

Tom said...

Well, just because it is not a FICO score doesn't mean it is not a credit score. There can be value in the score Credit Karma gives you as long as you understand what it is (and what it isn't).

matthew said...


Just for the record, I'm not trying to be argumentative. I understand that it is a Transunion product. They use your Transunion report to arrive at a FAKO score and called it your "credit score." The term "credit score," is used loosely and it can get confusing. As previously stated, you can only get your "true" FICO score at This score that Credit Karma generates is not your Transunion FICO, but rather a FAKO score. You state, "This Credit Karma score exactly matches my Transunion score, which is within a couple of digits of my FICO score," which is confusing. Your Credit Karma score, is the score that Credit Karma generates for you based on their company being a Transunion affiliate. The fact that your true FICO score and your CreditKarma score may be a coincidence. For measuring progress, it may be a cheap alternative for you just to use Credit Karma and save your $$$ by not using MyFico unless you absolutely need a score that lenders use to make credit decisions with. No Lender uses FAKO scores to make credit decisions. Also, any other the credit monitoring services (,,, etc. all offer their own FAKO scores. NONE of them hold any bearing in the real world of lending.

matthew said...


You are right and I stand corrected. There is meaning in the score. To me it is worthless because in the world of lending, it is not used. No lender pulls a FAKO. Lenders only use real FICO scores, auto-enhanced FICOS, and Lexis Nexis to make credit decisions. I know that there are other criteria, but you get my point.

For the sake of argument that you can monitor your progress (or lack thereof) by your CreditKarma score, you may be on to something.. it depends on how accurate the correlation between your FICO and this score is and would need to be compared every now and then to make sure.

just know, that this value they call your "credit score," is exclusive to you and them and is NOT used by lenders. Does this make sense?

JessicaW said...

I should mention that when I do have troubles with my identity getting crossed with my neighbors, it seems to exclusively happen with TransUnion. I always notify all bureaus, but TransUnion is the only report it ever shows up on. (why, I don't know). Credit Karma is nice for me 'cause I can keep tabs on this little identity scneario (my neighbor's name is the same as mine, and is frequently in collections!).

This did come up when we refinanced our house--they found more of these delinquient accounts that don't belong to me. But in that case, we had a full-underwritten loan rather than a score-based loan (our preference).

Hope that helps.

Anonymous said...


Did you know that the FICO that you buy from MyFICO may not be the one lenders use? FICO has many versions of their score. To suggest there is one "true" score is inaccurate.

matthew said...


Yes. Did you see my comment to Tom? I am aware that there are many versions of FICO. I maintain my position however, that FICO is the only score (regardless of version) that lenders use, which is my opinion, makes it "true." For you and I and for most of the community that does not have access to the other versions of FICO, it truly is the only one that matters - it's as close as we can get unless we have an "inside" connection that can reveal our scores associated with other versions. Auto lenders use a FICO that is auto-enhanced for example. Experian no longer sells its FICO to us. There is a "P" version.

I certainly do not claim to know every version & don't want to come across as a know it all, but I have done significant study and research in this area. I am certainly open and welcome anyone to educate me more.

My point in posting is to help, that's it - I have no hidden agenda. I do not work for any credit reporting service/agency/lending organization or any FICO/FAKO provider or anything like that.


Tom said...

Matt, thanks for the clarity you bring to the discussion on credit scores. It sounds like you are very familiar with the topic.

A year ago I wrote a guest blog post for Lending Club about the various credit scores. I discussed FICO, VantageScore, Experian PLUS score, TransUnion TransRisk Account Credit Score, and Equifax Score Power. Here's the post:

Understanding Credit Scores

I realize some things may have changed since then but I'm interested in your comments on my credit score discussion on the LC blog.

matthew said...

very cool - knowledge is power - :>)~

::: MeWithoutDebt ::: said...

I did a basic experiment to check accuracy of Credit Karma’s credit scores and they were within 5%. Check the detail results at;

Anonymous said...

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gennie chan said...

This article is a worth reading.

There are lots of things to be thankful for but i guess none of them is my debts. This is something i can hardly be proud of. My family knows about all my debts, they really wanted me to help on this until they discuss me about the free credit repair and the credit report score, I really work on hard just do get over it.

and now I am free from debts.