How Accurate is Credit Karma? 9 Takeaways

February 04th, 2022

Selling | Buying | Realtors®
How Accurate is Credit Karma? 9 Takeaways

How Accurate is Credit Karma?

Is Credit Karma Accurate? A common question from people who are using the free credit monitoring service. In this article we will dive into everything you need to know about Credit Karma's accuracy, how often Credit Karma updates, how the service works, as well as what to be aware of:

Credit Karma Guide

How Accurate is Credit Karma?

Many people looking to buy a home will need to know their credit score and “how accurate is Credit Karma?” is one of the more common questions we receive.

Below we will give you an in-depth overview of what Credit Karma is, how accurate Credit Karma is and how often Credit Karma updates.

Let’s dive in so we can understand how accurate Credit Karma is:

What is Credit Karma?

Credit Karma is a free credit monitoring service. Credit Karma allows consumers to track their credit scores, learn about credit, and sign up for credit alerts.

Credit Karma makes money by selling advertising and allowing consumers to use its free service. Credit Karma does a great job of helping consumers learn about what impacts their credit scores as well. What helps keep Credit Karma a free service is countless advertisements that consumers can sign up for. So how accurate can a free credit monitoring service like Credit Karma really be? Let's take a look under the hood.

How Accurate is Credit Karma?

Credit Karma scores are directly reported by two of the three credit agencies and are as accurate as someone can expect from a free credit monitoring service. More often than not, the accuracy of credit karma scores is in the right wheelhouse. The scores are not perfect and sometimes they can truly be way off so don't rely on Credit Karma. Instead, if you're buying a home or vehicle allow your credit report to be run by your financier and see for yourself where you stand. Some of the credit agencies will give you a free report as well.

While Credit Karmas scores may not be totally accurate they do allow one to track their progress and any changes to one's credit. This is the best use case for Credit Karma, to track which way your scores are moving and to get alerts on things that may be happening with your credit score. Credit Karma has saved a number of people from identity theft.

Credit Karma is accurate enough that it can keep consumers coming back. As the company has continued to grow the scores have become more and more trustworthy.

So is Credit Karma going to give you an accurate credit score? They should be pretty close. Here’s the reason:

“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 it’s 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” reports Bethy Hardeman of Credit Karma.

When you apply for a loan you may find the credit numbers are different from what Credit Karma reports - the scores should be somewhat close!

Credit Karma Vs. Actual Score

After asking 'how accurate is credit karma?' the next question is always, how does Credit Karma compare to my actual score of FICO Score? One of the best things about the Credit Karma service is that it generates the credit report straight from two of the top credit reporting agencies TransUnion and Equifax. Credit Karma and your actual score reported from TransUnion and Equifax will be very close, the number of points off won't be much. Experian is the one credit Agency that does not report to Credit Karma and this is where your score's largest inaccuracy will come from as it relates to your actual score or FICO score.

How Many Points is Credit Karma Off?

Many people ask 'how many points is credit karma off?' and the answer varies for each individual case. Credit Karma receives information from two of the top three credit reporting agencies. This indicates that Credit Karma is likely off by the number of points as the lack of information they have from Experian, the third provider that does not report to Credit Karma. If you can figure out your Experian credit score you will be able to generate an accurate detailing of how many points Credit Karma is off as it relates to your actual score.

Should I use Credit Karma?

Many folks are afraid to use Credit Karma because it requires things like a social security number to sign up. This is totally personal preference if someone is comfortable with giving out personal information in exchange for a convenient way to track their credit score. Without a social security number, it would be impossible for anyone to know what your credit history is like.

Many folks who are considering a home purchase will be giving their social security number to their mortgage lender to run their credit score. When the mortgage lender runs the credit score it will count as a hard inquiry on your credit report. When you give Credit Karma your social security it will not count as a hard inquiry as you are only using the Credit Karma service to gather information.

For all home buyers monitoring your credit is essential to your ability to buy a home. First-time homebuyers especially since they likely have not had the opportunity to build up as much of credit history as someone who is older. 

At the end of the day, if you're looking to monitor your credit score you should sign up for Credit Karma.

One of the main drawbacks to using a service like Credit Karma is that you will encounter a lot of great advertisements for credit cards and other things. This is a necessary evil though for Credit Karma to make money and provide a free service. Using Credit Karma to monitor your credit score and learn more about what impacts your credit score is more than a fair tradeoff.  One of the things I love most about Credit Karma is that although it's not the most accurate way to determine your credit score it gives you so many great tips on how to improve your credit score. The information they offer really gives great insight into how credit scores are affected and how credit scores are impacted is something many folks are unaware of.

How Often Does Credit Karma Update?

Updates from TransUnion are available through Credit Karma every 7 days. Simply log in to your Credit Karma account once a week to understand where your credit score is at. If Credit Karma is not updating don't worry, it can sometimes take up to 30 days for things to be reported to the large banks. From there it can take another two weeks for the lending institution to make the additional edits to your account.

The nice thing about Credit Karma updating the score every 7 days is that it allows you to keep a close eye on your score and the changes. You will see your current score and the update from past weeks, months, and more. With the weekly updates that Credit Karma offers you have a great opportunity to spot any potential problems before they arise.

In your account, your score will be updated and you will likely see the reasons as to why as well. 

Additionally, Credit Karma does a great job keeping you updated as to when things were 'last reported.' Meaning they will show you when they received their most recent bit of data and made changes to your account.

One of the best features of the Credit Karma app is that it will alert you to any potential problems with your credit or credit score. Every time something happens or is reported to one of the credit bureaus Credit Karma is able to send out an alert to the user to alert them and ensure it is a recognized activity. 

Is Credit Karma Worth it?

Credit Karma is worth it. The simple tradeoff of giving information and encountering ads for the ability to monitor your credit score and to learn how credit scores work is more than fair.

Credit Karma not only gives you an accurate score it gives you the information in the event your social security numbers or information has been breached. It's a bit ironic since Credit Karma themselves were under a bit of heat as they were hacked as well.

How Does Credit Karma work with Real Estate?

Home buying power and credit score are two things that go hand in hand, especially when it comes to the mortgage interest rate you will receive. If you have a better credit score, theoretically that should improve your home buying power. The best thing about the Credit Karma service is that it can teach you how to improve your credit score over time with simple tips and tricks that allow you to increase your home buying power over time. When it does come time to buy a home you will be well prepared to do so thanks to the Credit Karma service.

Credit Karma is one of the most underrated services when it comes to buying real estate and here's why it gives you crucial information. The information Credit Karma provides to consumers goes a long way in helping them understand their credit score, monitor their score and this information ultimately will impact buy their ability to buy a home.

When searching for great applications to use to monitor your credit score look no further than Credit Karma!

Credit Karma vs. Credit Sesame

What are the differences between Credit Karma vs. Credit Sesame? Credit Karma uses two of the top three credit reporting agencies while Credit Sesame only uses one of the top three credit reporting agencies. In general, you are going to receive a more accurate score from Credit Karma than you will from Credit Sesame making it the preferred credit monitoring service.

Aside from the fact Credit Karma's score will be more accurate than Credit Sesame it's important to note that Credit Karma also goes far and beyond what Credit Sesame offers. Identity monitoring alerts are one of the larger offerings Credit Karma brings to the table to ensure your identity is safe and your information is protected. They also offer programs through their partners that offer additional benefits as well such as free tax preparation, automobile values, and any DMV information or recall information.

Final Thoughts on The Accuracy of Credit Karma:

Credit Karma is a fairly accurate credit monitoring service that receives updates from Transunion every 7-days. You'd be hard-pressed to find a better credit monitoring service that doesn't charge you a fee to use their software. The nice thing about Credit Karma is that not only is their service easy to use, but it also's reliable and they teach you ways in which you can improve upon your current credit score. We highly recommend you use Credit Karma as a service to help you improve and monitor your credit activity!

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Ryan Fitzgerald

Ryan Fitzgerald

Hi there! Nice to 'meet' you and thanks for visiting our Raleigh Real Estate Blog! My name is Ryan Fitzgerald, and I'm a REALTOR® in Raleigh-Durham, NC, the owner of Raleigh Realty. I work alongside some of the best Realtors in Raleigh. You can find more of my real estate content on Forbes, Wall Street Journal, U.S. News and more. Realtor Magazine named me a top 30 under 30 Realtor in the country (it was a long time ago haha). Any way, that's enough about me. I'd love to learn more about you if you'd like to connect with me on Facebook and Instagram or connect with our team at Raleigh Realty. Looking forward to connecting!