There are so many apps these days that it can be hard to keep track of them all. One app that’s garnered a considerable amount of attention recently is Credit Karma. The ads may be enticing, but what exactly is Credit Karma and how can it help?
The Credit Karma app promises users access to their financial information — most notably their credit scores. Consumers can see these scores from the three major credit bureaus — Equifax, Experian and TransUnion — but this app offers something unique. Credit Karma shows users their credit scores for free.
Under the Fair and Accurate Credit Transactions Act (FACTA), the “big three” have to release free credit scores once a year. After that, however, these institutions charge consumers for access to these records. Credit Karma, on the other hand, promises free credit score checking year-round.
A Free Credit Score App
Credit Karma was founded in 2007, releasing their first free credit score the next year. The service passed one million members in 2010 and now serves more than 100 million members. It boasts plenty of users, but what do all these people get out of it?
The central idea driving Credit Karma is that finances are complicated, and many people need help with them. The first step in helping people with their finances is showing them their credit score. It is, first and foremost, a credit score app, after all.
A credit score is a rating that represents an individual’s “creditworthiness,” or how reliable a borrower they are. With a poor credit score, many companies may be unwilling to offer someone a loan, especially a competitive one. If someone knows their credit score, they can see if they need to adjust their finances.
How Does Credit Karma Work?
The fact that Credit Karma is free may make some users suspicious of its validity. After all, if their service is free, then how do they make any money? Where do they get their information, and how can they operate without charging?
The Credit Karma app is free to download and it never asks for credit card numbers. To stay in business, they make money through recommendations on their site and app. If someone purchases one of these recommended products, like a credit card, they get a commission from that company.
So that’s where they get their money, but how do they get their information? Using personal data like Social Security numbers, Credit Karma retrieves users’ credit scores from TransUnion and Equifax. Pulling from two different sources helps ensure they give users accurate data.
Given that Credit Karma deals with people’s finances, security is a chief concern for the app. As far as this subject goes, users may notice one possible point of worry. In 2014, the Federal Trade Commission (FTC) pressed charges against the company for misrepresenting its security standards.
That event isn’t a significant cause for alarm, though. Credit Karma settled the charges and is now safer as a result. The FTC now regularly inspects the company’s security, so its current security systems are trustworthy.
Using Credit Karma
How can someone benefit from using this credit score app, then? Knowing their credit scores can show users if they need to improve their financial standings for future loans. To provide further help, Credit Karma doesn’t stop at showing credit scores.
After giving a user their scores, the app will offer recommended courses of action. If there’s an error on their credit report, Credit Karma will help them dispute it. Similarly, if users’ interest rates are unreasonably high, the company will offer possible solutions.
Credit Karma doesn’t present users with everything at once. To help people focus and get things done, it takes a step-by-step approach to improving finances. That way, users can focus on one task at a time without being overwhelmed by information.
Credit Problems? There’s an App for That
Technology provides consumers with resources they wouldn’t be able to access otherwise. Sometimes it seems that there’s an app for just about everything. With Credit Karma, there’s an app for detecting and addressing credit problems.
Savvy users don’t take any promises at face value. With Credit Karma, even the most suspicious users can rest easy knowing they’re using a free and secure service. This credit score app can help anyone improve their financial situation.