Internet users are very suspicious of any company that offers anything for free, and rightly so. We are surrounded by scams and every year these scams are getting bigger, bolder and more profitable because people keep falling for them.
It pays to be vigilant, to constantly ask questions about the services that you are using.
As for this question, “Is Credit Karma a scam?” the answer is a resounding no.
And that’s coming from a website that offers a similar service and discusses similar issues. They are technically one of our competitors, but we also respect the work that they do because in many ways it is similar to what we do here. Like Credit Karma we offer free credit services to help you better understand the situation you are in and to help you find a way out of it.
At the top right of this page you will find links to our free credit helpline and as you’re reading this you may also see a popup advertising the same thing (if it pops-up at the exact moment you’re reading this don’t worry, it’s coincidence not black magic).
It may go against everything you have learned about the internet, but there are companies out there that want to help, companies that want to provide a service that you don’t necessarily need to pay for. That’s what we do and it’s what Credit Karma do. But, you might be asking, what’s the catch? After all, Credit Karma is a website that strives to make a profit like every other website. It’s not a charity.
What Does Credit Karma Do?
Credit Karma makes money by using the information that you provide to it. This has both positives and negatives. On the one hand it’s a win-win. They can make enough money to offer you a free service and to provide some free advice, and as well as that free advice you also get recommendations that have been tailored to your needs.
For instance, they may discover that you have a poor credit rating and then recommend a no credit check loan or a secured credit card. If you signup to that service then they make money by referring you.
This seems innocent and harmless and for the most part it is, but it is open to exploitation. We’re not saying that they do exploit it and we actually believe that they are one of the good guys, but there are sites out there who offer a similar service and simply recommend the loan or the credit card that gives them the highest amount of commission.
Think about it from their perspective and put yourself in their shoes. Let's say that an unemployed individual approaches you with a CV, gives it to you and then tells you that they will take any job that you can get for them. You find a company that is perfect for them but only pays you a $10 finder’s fee and you also find a company that is not so perfect for them but gives you a commission of $100.
Chances are they will choose the one you recommend, which means you’ll probably recommend the one that pays the most money. It’s the same story with any company that relies on commission through recommendations and it’s an inherent flaw in this entire system. The onus is therefore on you, the customer, to make sure you are being offered the best possible solution for your problem.
We provide the same service and we pride ourselves on being honest and straightforward (as we’re sure Credit Karma do) but we don’t expect you to automatically signup to everything that we recommend and we encourage our customers to research on their own.
Credit Karma Reviews
Credit Karma user reviews are fair to good, with the average being around 3 to 3.5 out of 5. As we always say, it’s important to remember that most customers only leave reviews when they have something bad to say, so it wouldn’t be fair to expect nothing but great reviews and a score of 3+ out of 5 is very respectable overall.
Some of the complaints regarding Credit Karma include
- Drops in credit score (although it seems unlikely that they are the cause of this).
- Poor customer support.
- Incorrect scores.
- Unsuitable offers.
Is Credit Karma Safe?
So, Is Credit Karma a Scam? You will need to hand over some personal information when you signup to Credit Karma and this is a concern for some users. The site seems to be safe and secure. It uses an SSL certificate and they seem to take security very seriously. However, as with the recommendation issue this is not something you should take for granted with Credit Karma or with any other company.
A recent European law changed the way that companies gathered, stored and processed customer data. It basically made like very difficult for any companies who thrive by selling data to third-party companies and doing other unscrupulous things. But no such law exists in the United States. There are laws governing the storage and use of data, but there are just as many loopholes and authorities have yet to establish anything as strict as the aforementioned European law.
Do I Need This Service?
There are many services out there that offer something similar to Credit Karma. If you struggle to handle things on your own then these can be helpful. However, it’s often best just to do it yourself. The more reliant you become on others the less independent and more detached you will be where your finances are concerned, and that’s one of the reasons why so many millions of Americans are in debt.
We find that the best way to stay in control of your finances is to understand every single aspect of them, whether that be your credit score (which you can view for free anyway) or the loans, credit cards and bank accounts that you signup for.
It can be daunting to have to handle all of these things when you’re already in the red. It’s easy to want to take the shortcut, to wave a magic wand that will make everything better, but that just doesn’t exist and debt is not something you can get rid of easily.
So, take the long road and browse through our guides on the subject of checking your credit score, getting out of debt, finding suitable loans and credit cards and, if you still struggle to make it back to the black, dealing with bankruptcy and debt collectors.