How the business makes money (a good guide)


Credit Karma, a multinational company supports you in your personal finances. They have become an incredible help to people. So in this article, we are going to give you their full guidelines, how it works, what other services they provide to you, and how they benefit you.

What is Karma Credit?

Credit Karma is a multinational personal finance company of United States of America which was established by Kenneth Lin, Ryan Graciano and Nichole Mustard on March 8, 2007. It is mostly recognized as a free credit management and financial management forum, but its features also include free tax preparation, monitoring unclaimed property databases and a tool to specify and dispute credit report errors.

All Credit Karma services are free for consumers. The revenue from targeted advertising for financial products offsets the expense of its free products and services. Credit Karma receives income from lenders, who spend on the business when Credit Karma successfully refers clients to lenders.

On February 24, 2020, Intuit announced plans to obtain Credit Karma for $ 7.1 billion. Click to Tweet

How does Credit Karma make money?

Credit Karma makes its profit by giving recommendations of their products and services to its members. Such as, they might suggest a particular reward card which can give you a good opportunity.

Where Does Credit Karma Get Your Credit Score?

The credit scores and reports you see on Credit Karma appear directly from TransUnion and Equifax, two of the three major consumer credit bureaus. The credit scores and reports you see on Credit Karma accurately reflect your credit data as reported by these bureaus.

That says a few things:

  • The ratings we give are accurate credit scores from two of the major consumer credit bureaus, which don’t just calculate your credit score. But that’s one of the reasons you’re asked for your Social Security number and other personal information to set up a Credit Karma account – so we can compare with you what the bureaus have recorded for you.

  • Credit Karma is not a credit bureau or credit reporting agency. We do not collect information from creditors, and creditors do not report information directly to Credit Karma.

What is a credit score?

The credit score is made up of those numbers that are as important to your financial goodwill as your credit scores.

Each of your credit scores contains a three-digit number related to the likelihood that you will pay off your debts. These numbers can go a long way in deciding whether a lender will accept you for a credit card or loan.

credit rating

We mentioned “each of your credit scores” because you probably have more than one. The three major consumer credit bureaus are Equifax, Experian, and TransUnion. They generate credit reports that include essential information about your credit accounts and your financial profile.

Credit rating criteria formulated by companies like VantageScore Solutions and Fair, Isaac and Company (FICO) use information from your credit reports to calculate your credit scores. Several credit reporting models may analyze the information on your credit reports differently, but high-impact factors typically include credit card usage, your payment history, and any derogatory marks on your credit reports.

Why are Credit Karma credit scores different from ratings elsewhere?

Credit Karma immediately removes your VantageScore 3.0 credit scores from TransUnion and Equifax. There are a few justifications for why you might receive different credit scores from each of the three major credit bureaus.

One of the main reasons you might have mixed scores is that all three credit bureaus can contradict information about you.

Here are three explanations why this may be the case:

1. Due to an error:

Errors in credit reports are common. Even if one office has your information completely correct, there is no guarantee that the other two offices will also have the correct information.

Thanks to Credit Karma’s Direct Dispute ™ tool, providing useful context, over $ 10.2 billion in inaccurate debt has been cleared from TransUnion credit reports since 2015. And that’s just one credit bureau. credit!

2. Not all lenders report to the three major credit bureaus:

Some lenders do not report to the three bureaus, but to one or two bureaus. Additionally, offices may not update your reports at the correct time. Different information can become the reason for different credit reports and credit scores.

3. Different credit scoring models can provide different results:

Finally, credit scores are calculated using different scoring models. Because each scoring model may emphasize different factors in your credit history, you may receive different scores even though they are based on the same credit reports.

What to do if incorrect credit karma information is found?

If Credit Karma displays incorrect information, it is usually for one of the following three reasons:

1. Creditors failed to provide up-to-date information to bureaus:

Creditors typically report your updated account data to the credit bureaus once a month, so it’s very common to see old balances, payment activity, and credit usage rates. Unfortunately, you have to wait for the information to be updated.

2. There is a risk of inaccurate or outdated information on the credit report:

If the false account information is more than a month old, it may suggest that your credit report contains incorrect or out of date information about your credit history.

In this case, it is recommended that you collect the entire credit report in question, check it carefully, and rectify any errors you observe directly with the credit bureau.

3. TransUnion and Equifax may be working slowly to update your report:

Even if an error is successfully detected, TransUnion and Equifax may take some time to update your reports.

On Credit Karma, you can see when your reports were last updated. You can also find out when the next update will take place.

How does Credit Karma give completely free credit score when other services want to charge monthly?

Credit Karma gives totally free credit score because of advertising. For example, if you have very good credit, banks will be inclined to pay quite well and target you with their best loans and credit cards, because it is ultimately inexpensive for them to advertise to millions of people who might not use their products.

If there’s one downside to Credit Karma, it’s the fact that they use your personal credit information to promote it to you. It’s like Facebook using your likes to display ads based on your interests.

What else does Credit Karma offer?

The Credit Karma service also offers:

  • A graph showing your credit score over time.
  • Compare your credit score to others based on income, age and condition.
  • A credit report card that illustrates specific aspects that affect your credit scores, such as your payment history and debt usage
  • Providing you with tools to simulate debt payment or referral for new credit will improve your score
  • Go through your free credit report with weekly updates

Does Credit Karma Share Personal Information?

Credit Karma undertakes not to share or show the information of its members to third parties without their consent.

There is an unusual case where they might share your data with other organizations, but with your consent only.

It is essential to know that while Credit Karma may be eligible to pre-fill some of your information on a bank or lender’s application, you will still need to provide the application on your own. And once you have agreed to cede your data to a third party, it will be up to them to keep them in accordance with their own private criteria.

How Credit Karma can help you preserve your identity:

Credit Karma’s protection standards are exceptional, not so that every organization can access your data.

Credit Karma discovers that more than 105 million Americans have passwords that can easily be removed on the dark web. Click to Tweet

Fortunately, Credit Karma helps with this problem as well. While facilitating free credit scores and reports to their members, they also offer free credit monitoring.

Credit Karma notifies members whenever a new scrutiny occurs on their credit report. And they analyze over 13 billion public and dark web breach records to make sure your personal data has been affected.

We hope that our detailed credit karma research will help you get all your questions about them answered and any doubts cleared up.


About Cecil Cobb

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