Whenever you're considering giving a company access to your personal information, it's essential to do some research first. Considering that Credit Karma is one of the most prominent credit monitoring services available, it's perfectly reasonable to wonder, "Is Credit Karma safe?"
Used by somewhere around 130 million users and nearly half of American millennials, Credit Karma is a well-known and well-regarded service. As one of the most prominent credit monitoring services, you certainly don't have to question whether this is a "legit" company.
So, just how safe is Credit Karma? Let's take a look at what you should know.
When you google "Is Credit Karma Safe?" the top results will likely assure you that Credit Karma is a safe and secure credit monitoring service.
The truth is, though, you are always taking risks when you enter personal and sensitive information online. There are major benefits to using credit monitoring services, and Credit Karma is one of the most prominent free services out there. This means that each individual has to weigh out the pros and cons of using a service like this before moving forward.
The shortest answer is: yes. Credit Karma is a safe service and a legitimate company. They have fairly impressive security practices and promise to go the "extra mile" to keep your data safe. First, let's look at their security features, but be sure to stick around for some of the caveats that you'll want to know about.
Some of the security features they utilize include:
They also use a program where they pay people to go through their site to look for vulnerabilities. This is known as a bug bounty program. Other big tech companies, like Google and Apple, have been using this type of program for years.
Though Credit Karma claims to go above and beyond when it comes to protecting personal and financial information, and it certainly appears that they do from their list of security practices, it's important to recognize that there's no such thing as being 100% safe when entering your personal information online.
A cautionary tale to this effect can be found in Credit Karma's own history.
In 2019, a number of Credit Karma users claimed that they were being shown the account information of other people when they logged in. This includes information about credit card accounts and current balances for complete strangers.
According to a Credit Karma spokesperson, this occurred as a result of a "technical malfunction," and there was "no evidence of a data breach." They didn't comment on how many customers were impacted or how long the issue went on.
Though this isn't technically a security breach, you also probably want to know about the action the FTC took against Credit Karma at the end of 2022.
According to the FTC, they took this action against Credit Karma for:
"...deploying dark patterns to misrepresent that consumers were “pre-approved” for credit card offers. The FTC alleges that the company used claims that consumers were “pre-approved” and had “90% odds” to entice them to apply for offers that, in many instances, they ultimately did not qualify for. The agency’s order requires the company to pay $3 million that will be sent to consumers who wasted time applying for these credit cards and to stop making these types of deceptive claims."
The complaint went on to say that Credit Karma harmed consumers in two ways:
At the end of the day, only you can decide whether or not you want to use an online credit monitoring service like Credit Karma. Though there does appear to have been a malfunction in 2019 that exposed the personal information of users to other users as well as some sketchy practices with the pre-approved offers, most experts state that Credit Karma is safe to use.
There are always risks when you enter your personal information online. Credit Karma is used by somewhere around 130 million members in the U.S., Canada, and the U.K. Almost half of all American millennials use the service.
You can rest assured that Credit Karma is just about as "legit" as credit monitoring services get, as it's one of the most well-known services, along with Experian, CreditWise, Equifax, TransUnion, Credit Sesame, and IdentityForce.
Yes, in order for Credit Karma to link to your credit profiles, they'll need to collect certain information.
Credit Karma will ask you for your personal information, including your:
They use this information in order to match your identity with your credit files. Credit Karma gives you access to your Equifax and TransUnion profiles.
In some circumstances, Credit Karma might need your full Social Security number in order to locate your particular credit files.
Though you might only have to hand over a few key pieces of information about yourself in order for Credit Karma to link you to your credit profile, people who are particularly concerned with privacy and security might be interested in taking a look at the Global Privacy Statement provided by Credit Karma's owner, Intuit.
In this lengthy document, you'll find that a lot more information about you might be collected than you originally thought. Since the document doesn't make a clear distinction between Credit Karma and other Intuit brands, it's difficult to know precisely which information is applicable to the credit monitoring service.
For what it's worth, Intuit also owns the following popular brands:
Credit Karma states the following when it comes to selling or sharing your personal information:
"We do not sell your personal information to or share it with unaffiliated third parties for their own advertising or marketing purposes."
One question that might be on your mind is how Credit Karma is able to be a profitable business if it offers its services for free.
After all, Credit Karma doesn't just offer credit scores to consumers but also useful tools that help them improve their credit profiles and ratings.
Using Credit Karma, individuals can access their information as often as they desire, completely for free. As a point of contrast, you can only receive your complete credit information from the three major credit bureaus for free once a year.
According to Investopedia, Credit Karma makes money by charging a fee every time a user ends up buying one of the services or products it recommends. Essentially, they advertise financial products to you based on your personal information and then receive a commission if you end up following through.
Before I sign off, let's take a closer look at some frequently asked questions about this popular credit monitoring service.
Credit Karma isn't a credit reporting bureau that collects information from creditors. Instead, it's a fintech company that uses your TransUnion and Equifax credit reports to offer scores and credit profiles.
When you see your credit score on Credit Karma, you're viewing VantageScores that are calculated using information from your Equifax and TransUnion reports. This means that you won't see your FICO score or information from your Experian report.
The short story is this: your Credit Karma score should be accurate-- the scores and reports you see "come directly from TransUnion and Equifax," according to Credit Karma. At the same time, it might be different from the score you receive from Experian or another credit monitoring service.
Though we often think of our credit score as a single, three-digit number, most of us have more than one credit score. This is because credit scores can be calculated using different models and using different information sourced from different credit reports.
Credit Karma uses Equifax and TransUnion to provide you with your credit scores and reports. This means that you get to see your information from two out of the three major credit bureaus.
Your credit file or score from the third credit reporting agency, Experian, won't show up on your Credit Karma profile.
Credit Karma uses the VantageScore 3.0 model. It calculates two scores for you, one using your Equifax credit report and one using your TransUnion credit report.
VantageScore was designed and created by all three credit reporting agencies in a collaborative effort. It is one of the two most widely-used credit scoring models, along with FICO.
Which credit scoring model and credit bureau a lender will use when making a lending decision is going to depend on a variety of different factors. FICO is the more popular of the two. Straight from the horse's mouth, FICO claims that 90% of top lenders use FICO when making lending decisions.
According to Credit Karma, your TransUnion credit score can be updated as often as every day. For your Equifax score, though, you shouldn't expect it to be refreshed more than once a week.
As of March 1, 2023, a limited number of members were receiving daily updates to their Equifax scores. Your updated score, if you're due for one, will refresh automatically when you sign into your account.
You can look at each individual score on your profile to learn when your score was last updated.
If you're careful to keep your credit in good shape, you likely know that hard inquiries can temporarily lower your credit score. Beyond that, too many hard inquiries in a short period of time can raise some red flags for lenders.
For this reason, you might be concerned that Credit Karma is going to impact your credit score. After all, if you're checking it every day or every week, couldn't that ding your score?
The good news is that using Credit Karma doesn't hurt your credit score. The reason for this is that using the service is considered a self-initiated inquiry. This means that it's just a soft inquiry, which won't harm your score and won't be viewable by anyone other than you on your credit reports.
Credit Karma won't directly or automatically help you improve your credit. That being said, this service (as well as other credit monitoring services) can be a useful tool for monitoring and managing your credit.
In addition to offering you free access to your credit scores and reports from TransUnion and Equifax, Credit Karma also provides features and resources that can help you gain a greater understanding of your financial situation. In this way, it can help you improve your credit by giving you the information you need to make informed decisions.
Some of the ways that Credit Karma can help you boost your credit include:
Credit Karma also offers personalized recommendations for credit cards and loans. This is also how they make their money as a company-- by taking a kickback when you purchase a service or product they advertised to you.
There's no shortage of credit monitoring services out there. Some of them are free, some of them cost money, and many of them offer some free services in addition to additional paid membership plans.
Here are some popular alternatives to check out:
Credit Karma is one of the most well-known credit monitoring services. Since it offers countless resources and tools for free, it's no wonder millions of people use it. They offer lots of safety features to help keep your private info secure.
Whether you choose to use Credit Karma or another monitoring service, keeping track of your credit is a great financial health habit.
Ready to start improving your credit? Make sure you check out our Credit Building Tips blog!