How Accurate Is Credit Karma?

By PropertyClub Team
Jun 25th 2023
In recent years, Credit Karma has become one of the most popular online services for checking your credit. The website is one of the fastest ways to get your credit score for free. But how accurate is the service and is it safe to use?

If you’ve been trying to buy a new home, you already know that your credit score will count a lot. Having good (or at least decent) credit is a must if you want to be able to afford a home via a loan, and using a credit monitoring service like Credit Karma is a great way to track your score. The commercials for this service are everywhere—YouTube, online searches, even television networks have been showing them for years. So, what’s the deal? Is Credit Karma accurate or even legit? 

hash-markIs Credit Karma Accurate?

Accuracy is a hard term to work with when discussing credit scores. Most people do not realize this, but there are hundreds of different credit scores out there. Currently, Credit Karma works with TransUnion and Equifax’s VantageScore 3.0 algorithm. So you get two scores instead of one.

Credit Karma is fairly accurate, primarily because it does what’s called a “soft pull” that requests data from the credit bureaus without damaging your account. With that said, there may still be discrepancies because they are not hard pulls. 

Many people casually noted that Credit Karma usually only takes the past two years of “stuff” into account. Unfortunately, this means that your full score might not show because certain issues won’t reveal themselves.

Do All My Credit Problems Show Up On Credit Karma?

Most but not all of your collections and missed payments will show up on Credit Karma’s reports. It just depends on the collections agencies and creditors, who have the right to choose which credit bureaus they report to. Most groups will report it to TransUnion or FICO, or maybe all three. Some might only report them to one. 

As a result, there’s always a chance that there may be other “dings” to your credit report that Credit Karma doesn’t pick up. Despite the discrepancies, it’s relatively safe to say that Credit Karma can give you a better idea of your credit score. 

Why Is My Credit Karma Score Higher Than My FICO Score?

FICO is a different credit score than the TransUnion or Equifax scores Credit Karma shows. Though the score tends to be similar to both that Credit Karma measures, the equation that FICO uses to calculate your score will have slightly different weights. This yields a different score. 

Most people find that their FICO scores are slightly lower than Credit Karma. In some cases, you might have a collection that Credit Karma might not have picked up. 

hash-markHow Often Does Credit Karma Update?

It all depends, but lately, Credit Karma seems to be working on weekly updates. So, you can actually work on seeing your credit improve week by week. While the updates can be weekly, the truth is that it may take a while to see your credit-building efforts take effect. 

For example, it can take over one to two months just to see a credit report dispute pull through. This means that you may have to wait two months in order to see your credit score improve after the negative mark in question has been challenged. 

On a similar note, it can take several weeks to get your credit score to reflect a recent negative mark. It depends on how long it can take for creditors to report it to the bureau. So while Credit Karma updates weekly, that doesn’t necessarily mean you’ll see the changes coming to your credit report immediately.

Why Does It Take So Long For Disputes To Go Through On Credit Karma?

Credit bureaus are legally required to update their credit files around 45 days after getting a dispute letter. However, it’s important to realize that it can take longer than 45 days for the bureaus to process things. 

Moreover, it’s important to remember that Credit Karma is not the same as the credit bureau. So, they are not getting real-time updates on their end. They have to do automated updates where the information gets sent to them from the credit bureaus. 

hash-markIs Credit Karma Safe?

Credit Karma is one of the safest credit monitoring services around. The ratings alone speak volumes about their security. Your data is protected with excellent encryption and two-factor authentication, not to mention that they also offer credit monitoring specifically for the reason of helping people see if their identity was stolen. So yes, it’s safe to use.

How Does Credit Karma Make Money?

Running a website that pulls soft scores for free isn’t exactly cheap, but the site itself is fairly lucrative. Though the site is most commonly recognized for its free credit reports, most of the money it makes is through referrals. 

After running your credit, Credit Karma makes an effort to pair you with credit cards, mortgages, and loans that are deemed to be accessible to someone like you. You have no obligation to open any of these credit card offers or anything similar. However, if you do, Credit Karma gets a commission. 

How Can Credit Karma Help Me?

If you’re trying to afford a new car or a new home, there are many ways that Credit Karma can help you make it happen. These are the most common ways that people use the site to help them:

  • It helps people gauge whether or not they can afford a home or qualify for the loan they want. 
  • People who are worried about finding a lender who they can work with usually enjoy the fact that loans get pre-screened to see if you fit typical qualifications. 
  • If you are prone to identity theft issues, Credit Karma can help you determine if someone has opened an account in your name.
  • People who find inaccurate or false information on their credit reports can also use the site’s dispute function to potentially remove them. This, in turn, can improve your credit score. 
  • Credit Karma also offers users the ability to learn more about how they can improve their credit scores. 

hash-markAm I Guaranteed Approval For Offers Credit Karma Gives Me?

There are many misconceptions surrounding the offers and credit card recommendations that Credit Karma gives people. One of the most common issues people have occurs when they try to apply for a new credit card suggested by the site, only to get rejected. 

The truth is that the credit cards Credit Karma suggests do not have any requirement to accept or reject people. It’s possible to get rejected for a card even if you have the right FICO score for the program. So expecting an instant yes just because you’ve received it as a recommendation doesn’t fly.

Why Was I Rejected For A Credit Karma Offer?

There are many different reasons why Credit Karma may have paired you with an offer that didn’t approve you. Though having a lower credit score is the most common issue that comes to mind, the truth is that it could also be anything from having the wrong income to not spending enough. 

While it can feel somewhat hurtful to get rejected by a credit card company or loan company, there is some good news. Rejection for a credit card application usually means that the company must send a formal letter explaining why you were rejected.

For people who want to know why they’ve been rejected, having a letter detailing the explanation of why you didn’t get approved is a huge perk. This gives you a way to work on the financial factors that caused you to get rejected. 

Why Was I Matched For A Credit Karma Offer If I Wasn’t Qualified For It?

Credit Karma’s algorithms aren’t perfect, and while they can give you a good ballpark idea of what you can qualify for, it still has limits. The way that the site’s algorithms work is simple: it sees what other people in your financial ballpark have been approved for, then offers the same offers to you. 

Since the program operates on the assumption that you will follow the same pattern of approval as others, it’s more of a “guesstimate” than a fully-inspected pairing. Exceptions to every trend exist, after all. 

hash-markHow Accurate Is Credit Karma Bottom Line

If you were looking for a free way to get a good beat on your credit score, then Credit Karma could be the thing you were hoping to see. Credit Karma can be the credit-building ally you need in order to whip yourself into good financial shape. 

While it’s great to have a better idea of where you stand on the credit score spectrum, it’s important to realize that Credit Karma has limits. The best way to make sure your FICO score is ready for a new home purchase is to ask for a copy of your credit report from FICO itself.