Credit Karma can be a great tool in your financial wellness toolkit, and a great resource for travel enthusiasts who regularly cycle through credit cards .
Tracking your credit score is important. While it may not be as important as getting out of debt (which naturally hurts your credit score), or saving for retirement, having a good credit score can save you thousands of dollars annually.
Having a bad credit score can cause an immense amount of financial pressure on Canadians. Mortgage rates (or mortgage amounts) can be affected, credit cards can be extremely difficult to obtain, and larger purchases that you may wish to finance (like an automobile) could simply be a pipe dream.
For Canadian travellers who are regularly cycling trough credit cards in order to obtain lucrative credit card sign up bonuses, continuously monitoring your credit score is important. You don’t want to see your score plummet, see the reasons above.
Lucky for you, there is a product in the market that allows you to track your credit score on an ongoing basis…for free
In this post we’ll walk through how Credit Karma can help you achieve your financial & travel goals.
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Credit Karma History
Founded in 2007, CredIt Karma was launched in an effort to help Canadians obtain their credit score without having to deal with the fees associated with large financial institutions.
Traditionally, obtaining your credit score required you to work with a major financial institution, and pay a fee.
Credit Karma bills itself as an easy to use product, without the fees.
Credit Karma is a US based company, and has been in Canada for 4 years
What Does Credit Karma Do?
Credit Karma pulls your credit score from Transunion (one of Canada’s largest credit bureaus), and allows Canadians to track their credit score for free. This service historically came with one time or monthly fees, and naturally, the free offerings from Credit Karma have been a disruption in the space.
Credit Karma combines weekly credit checks with financial education to help Canadians understand how their credit score can financially impact major purchases.
Credit Karma will take your personal information, but it is as secure as any platform, so you shouldn’t worry about cyber risk. It is owned by Intuit, which also owns reputable financial wellness products like TurboTax & mint.com
Another thing to note about Credit Karma is that it only performs “soft” credit checks, meaning that any inquiry performed by Credit Karma will not negatively impact your credit score. Hard inquiries performed by financial institutions will negatively impact your credit score for a short period of time.
Credit Karma also provides its users with the following benefits:
- A graph showing your credit score over time
- How your credit score compares to others by age, income and state
- A credit report card that shows you how certain “factors” like your payment history and debt utilization impact your credit score
- Tools to let you simulate how paying down debt or applying for new credit will change your score
Credit Karma Positives
1. Free, Free Free,
During my 20’s, I needed to obtain my credit score to assist in an apartment rental application. I obtained my credit score online with Transunion and moved on with my life.
Eventually, I noticed that Transunion was pulling $20 from my bank account every month as an ongoing service fee. When I went online to cancel these monthly transactions, I was told that I needed to call a 1-800 hotline. After ~5 attempts of calling the hotline, I was finally able to cancel these monthly transactions (after a 30 day cancellation fee).
Credit Karma is 100% free.
2. Easy to Set up
Setting up your Credit Karma account doesn’t take more than 5-10 minutes. You will of course need to provide some personal/financial information (such as your SIN number), and you’ll instantly have access to your credit score.
There are security measures in place such as a two step authorization which you can take advantage of to further protect your personal information.
3. Easy to Use
Upon logging in, you will have instant access to your credit score through Transunion.
Here is a walk through of the very similar US user experience
Credit Card Information
From the home page, you’ll be able to navigate through different credit cards and mortgage rates available in the Canadian market.
4. Credit Knowledge
In addition to accessing your own credit score, you can also browse a number of articles which dives into how a credit score is created, and things you can do to raise your credit.
5. Great Mobile Experience
With some financial products in the market, the mobile experience can be lacking compared to the desktop version. Credit Karma provides an easy to use mobile experience to compliment their desktop version. It’s a great option for mobile-first consumers.
Credit Karma Weaknesses
1. Credit Cards Offerings
While the credit card offerings through Credit Karma may make sense for some people, it is tough to understand where their credit card suggestions fit within the broader credit card landscape.
For example, the American Express Cobalt card is promoted on Credit Karma, but the website fails to mention why the Cobalt is such a great offering in the market, how the signup bonus compares to similar cards, and best practices for using the American Express Reward points.
If you’re looking for detailed information on the credit card market in Canada, there are websites (like this one) which provide further detail.
All that being said, there is the occasional credit card sign up boost that Credit Karma will offer. In such cases, we’ll be sure to keep you in the loop.
2. Narrow Thought Leadership
Credit Karma bills itself as a broad financial wellness platform, but the website fails to touch on many important aspects of achieving a state of financial wellness (investing strategies, a rewarding career, etc.)
Credit Karma Conclusion
As mentioned off the top, ensuring you have a good credit score can help reduce the monthly fees associated with housing and auto payments. It can also enable you to sign up for credit cards which offer lucrative signing bonuses.
All this can equate to thousands of dollars a year in terms of savings
Credit Karma allows you to track your credit score on an ongoing basis, and will allow you to watch your credit score rise over time.
This is a free offering that can do an adequate job when comparing it to the large creditors in the market.
It’s a great service that has a place in your financial wellness, and your travel portfolio
Credit Karma Competitors
Credit Karma vs Borrowell
Read >>> Borrowell Review
Borrowell is the other large free credit score provider in the Canadian market. Quite frankly, Borrowell offers many of the same features as Credit Karma.
While Credit Karma pulls your credit information from Transunion, Borrowell pulls from Equifax (Canada’s other major credit bureau).
Transunion & Equifax occasionally will post different credit scores. As a result, some Canadians choose to sign up for both Borrowell & Credit Karma in an effort to get a more holistic view of their credit score.
Borrowell also offers debt repayment options for Canadians through the platform
| Credit Karma | Borrowell |
| Free credit score monitoring | Free credit score monitoring |
| Financial Marketplace | Personal loans |
| Personal Loans through loanconnect.ca | Credit coaching |
| Thought leadership | Financial Marketplace |
Credit Karma FAQ
How Does Credit Karma Make Money?
Credit Karma is free, but they still want to make a profit. Credit Karma makes money in two main ways:
- Disclosing spending patterns to advertisers
- Taking a commission upon credit card sign-ups
Who Runs Credit Karma?
Credit Karma is a multinational company founded in 2007 by Kenneth Lin, Ryan Marciano, and Nichole Mustard. Today, Lin is chief executive officer, Marciano is chief technology officer, and Mustard is chief revenue officer.
In December 2020, Intuit, the company behind TurboTax, closed the acquisition of Credit Karma in a deal valued at $8.1 billion including cash and stock.
Is Your Credit Karma Score Accurate?
I’ve pulled this clip from Investopedia.com to help provide some light on this frequently asked question.
“Investopedia reached out to Credit Karma to ask why consumers should trust Credit Karma to provide them with a score that is an accurate representation of their creditworthiness.
Bethy Hardeman, chief consumer advocate at Credit Karma, responded: The scores and credit report information on Credit Karma comes from TransUnion and Equifax, two of the three major credit bureaus. We provide VantageScore credit scores independently from both credit bureaus. Credit Karma chose VantageScore because its a collaboration among all three major credit bureaus and is a transparent scoring model, which can help consumers better understand changes to their credit score.
Credit Karma isn’t a credit bureau, meaning they don’t gather information from creditors. The credit scores and reports you see on Credit Karma reflect your credit information as reported by TransUnion and Equifax, two of the major consumer credit bureaus. These scores are not estimates of your credit rating, which makes them accurate and reliable“
Does a Credit Check on Credit Karma Affect my Credit Score?
Credit Karma only performs “soft†credit checks, meaning that any inquiry performed by Credit Karma will not negatively impact your credit score. Hard inquiries performed by financial institutions will negatively impact your credit score for a short period of time.
What are the Credit Score Ranges in Canada?
In Canada, credit scores start at 300 and go as high as 900. A bad credit score is a score of 574 or less. This means banks, lenders, landlords, and even some employers will consider you less financially responsible than borrowers with a higher score.
Needless to say, having a bad credit score can drastically impact an individual’s journey to financial freedom. As a result, Canadians should be actively trying to raise their credit score.
4 Steps to Help on Your Financial Wellness Journey
- Before you can improve your credit score, you first need to know where you’re starting from. Free services like CreditKarma can help you do this.
- Try and use roughly 1-10% of your overall credit allotment on a monthly basis (the smaller the better).
- Set up automatic payments between your financial institution and your credit card, eliminating the unfortunate mistake of missing a payment (read: how to track your spending).
- Cancelling credit cards will negatively impact your score. The majority of creditors in Canada will allow you to transfer to a different card. This does not impact your credit score (commonly called “product switching”)
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