Planning on applying for a loan, renting a car or owning a home? You’re credit score is going to be reviewed. If your credit score is too low, your loan application will likely be declined. To make your life easier, enter Credit Karma. A website that lets you check your credit score for free so there’s no surprises when applying for financial products. Today I’m doing a deep dive and providing you with my Credit Karma Canada review so you can decide if it’s right for you!
What is Credit Karma Canada?
Credit Karma was founded in 2007 by Kenneth Lin and his co-founders Ryan Graciano and Nichole Mustard in the USA. They believed that people should be able to access their personal financial data for free. In 2008 the company started to provide its customers with free credit scores so they could make better choices when it came to their personal finance.
In 2016, Credit Karma expanded to Canada and is now the leader in providing free credit scores to Canadians country wide. As the company grew, they began offering additional services including:
Free credit scores and reports
Credit Karma offers customers free credit scores and reports that are updated on a weekly basis. They use the Vantage Score 3.0 which was developed by Equifax, TransUnion and Experian respectively. When you request your score, Credit Karma will pull it from the TransUnion or Experian database which ensures accuracy.
You also have access to your full credit report under the report tab. This is where you can see your current credit and your credit history that contributes to your credit score. I recommend reviewing this to make sure your report is up to date and has accurate information. Unfortunately it’s quite common for credit reports to have errors.
When signing up you must verify your identity by answering questions that TransUnion and Experian have within your file. This entire process only takes a minute or two and is extremely seamless, granted you know the answers to the questions.
Credit Card, Loan and Mortgage Recommendations
Once Credit Karma has your credit score, they will recommend you credit cards, loans and mortgage rates you qualify for. Given that Credit Karma has all of your financial data, these recommendations should be very accurate given they can accurately determine approval rates. With that said, this is one of the main ways Credit Karma makes money. Therefore the credit card, loans and mortgage lenders recommended are from their partners and are therefore not 100% unbiased.
With that said, they offer credit cards, loans and mortgage rates from many major banks and programs in Canada including: American Express, CIBC, MBNA, Triangle Mastercard, HSBC, BMO and TD.
Credit/Financial Account Monitoring
Credit monitoring is exactly what is sounds like. Credit Karma will monitor your account for any suspicious activity, credit opened in your name or late payments. This is so important since fraudulent activity on your account can have a huge impact on your personal financial situation.
In 2016 the company expanded to Canada. Now with 1.5 million users, it’s one of the biggest providers of free credit scores in the country.
Learn more about the account monitoring here
Mobile App
Credit Karma has a free mobile app that is incredibly easy to use! It makes checking your credit score really fast. I also have the say the interface is easy to navigate as well.
See the Credit Karma Mobile App Here
Free Tax Filing Services
In the USA, Credit Karma offers free tax filing services. This unfortunately is not currently available in Canada.
Is Credit Karma Safe?
To judge whether a business is safe the first this thing I do is look them up on the Better Business Bureau. Currently the BBB ranks Credit Karma at an A+ (meaning they rank between 96.99 – 100 on their 100 point scale). However with that said, Credit Karma is not an accredited BBB Business.
Over the last 13 years, they’ve had a total of 393 complaints which is quite low for the 60 million users they have worldwide.
Main Reason For Complaints
I took a quick read through the complaints and noticed a common theme. Many users complain that their credit score is missing information. Unfortunately what people are failing to realize is Credit Karma does not hold this information nor do they have the authority to change this information. Remember, Credit Karma is just pulling this information from TransUnion and Experian. Think of them as a middle man between you and the credit Bureaus. If you have issue with your report you need to contact TransUnion and Ep directly.
Credit Karma Security
Next I like to take a look a company’s security statements. Credit Karma makes the following claims:
- “Credit Karma uses 128-bit or higher encryption to protect the transmission of your data to our site.” (Credit Karma)
- “We enlist independent, third-party experts to assess our site for vulnerabilities. They also confirm and validate the security of our site on a regular basis.” (Credit Karma)
- “Our security precautions include firewalls and other more advanced technologies (but we’re not giving away our secret sauce!).” (Credit Karma)
- “We have a dedicated security team that investigates issues and responds where needed.” (Credit Karma)
- “We do not share your personal information with unaffiliated third parties for their own marketing purposes. You can check out our Privacy Policy for more details.” (Credit Karma)
Credit Karma appears to be using solid security precautions to make sure your information is safe. They also only partner with credible partners like major Canadian and American banks.
What’s a good credit score in Canada?
Before going into the Credit Karma Canada review more, I want to talk about what credit scores actually are. A credit score, is a number between 300 – 850 (sometimes 900) that lenders and creditors use to determine if you can repay future debt. Essentially it indicates your financial risk level. If your credit score is high, lenders are more confident you can repay your loans.
Credit scores are determined by the following 6 main factors:
- Payment History
- Credit History
- Amounts Owing
- New Credit
- Types of Credit
- Financial Hardship
You want to aim for a credit score of 650 or higher to be in good standing. This will raise your chances of getting credit and loans in Canada. Why? You will be considered less risky to creditors and lenders. The higher your credit score, the more likely you will repay your future debt.
The average Canadian’s credit score is 650. This means that the average Canadian qualifies as fair. If your score is below that don’t fret, but some work is needed to raise your score so you can qualify for more financial products.
For more information, see my related article:
WHAT IS A GOOD CREDIT SCORE IN CANADA?
Soft Credit Check
You’ve probably heard that checking your credit score can actually cause it to decline. Enter a soft credit check inquiry. Credit Karma uses this to acquire your credit report which does not impact your score.
Free credit report with Credit Karma
Before writing this article I decided to sign up for Credit Karma to see if it’s really 100% free and how easy it is to use.
1) First you need to sign up, click here
2) Next Credit Karma is going to ask you for your personal information including your full name, address, phone number and date of birth. Using this, they’ll locate you in either the TransUnion or the Experian data base.
3) You’ll then be asked a variety on questions based on your credit history to validate your identify. This only took me 2 minutes. After that you’re given your free credit score.
I have to say, this entire process was incredibly seamless. I ran into 0 issues and had my credit score within 3 minutes of signing up.
Credit Karma Accuracy
This is one of the biggest questions asked when it comes to Credit Karma, is it accurate? The short answer is that it’s going to be as accurate as the information that TransUnion and or Experian has.
There are only 2 main credit bureaus in Canada that all major creditors and lenders use when pulling your credit score. TransUnion and Equifax. If you’re Canadian, Credit Karma uses the TransUnion database to give you your score. Therefore the short answer is yes. Credit Karma is giving you the same score that TransUnion would give a creditor if they requested your score.
If you would like your score from Equifax I recommend you use Borrowell. They provide free credit scores like Credit Karma however they access the Equifax data base to calculate your score.
Also you need to keep in mind that credit bureaus use very different models to calculate your credit score therefore they will always be a difference between the two.
Errors in your credit karma report
If you notice errors in your credit report or you think your score should be higher you must contact the credit bureaus directly. Credit Karma is the middle man and cannot change any of your information.
Missing information in your credit score is unfortunately common. You will need to correct these mistakes yourself by contacting the credit bureau directly.
Pros and cons of Credit Karma
Pros
- Free weekly credit score and credit report for life
- No spend requirement
- Free tax software if you’re in the USA
- Free credit and loan recommendations
Cons
- Can report errors if your credit information is not up to date within the TransUnion or Experian data base
- Offers on credit cards and loans are only from their partners
How does Credit Karma make money?
Credit Karma makes money through Advertising and Affiliate Marketing. Requesting your credit score is 100% free. Based on your score, credit Karma will then recommend certain cards or loans that you qualify for. You do not have to apply for them, however if you do, Credit Karma will receive a small commission.
Given that Credit Karma is offering free credit scores with no strings attached, I think their revenue model is completely ethical. They also only offer loans from major accredited banks.
Credit Karma vs Borrowell
To make sure this Credit Karma Canada review is complete I had to compare them to their biggest competitor, Borrowell.
To be able to accurately report on how these two services compare, I decided to sign up for Borrowell. Borrowell only took 3 minutes tops to provide my credit report. I did not have to provide my SIN, however I did need to answer some security questions so they could verify my identify.
Borrowell pulls your credit score from the Equifax database therefore it may vary slightly from your score provided by Credit Karma. To demonstrate, here is my score from Borrowell:
My credit score from Borrowell is 768. Compared to Credit Karma which is 798, there’s a 30 point difference. The reason behind this is that Borrowell is pulling my score from the Equifax data base. Equifax calculates your score differently than TransUnion (the credit union Credit Karma pulls from). Equifax may also be missing some information that TransUnion has on me.
Main Differences Between Borrowell and Credit Karma
High level, Borrowell and Credit Karma are virtually the same, expect they pull your score from two different credit unions. With that said, Borrowell does varies slightly from Credit Karma, in that they also offer recommendations for car loans, insurance and bank accounts. Again, these offers are based on your credit score and are provided by their partners. However, this is a great service to use if you want any of these financial products.
Overall Thoughts
To summarize this Credit Karma Canada review, I cannot recommend Credit Karma enough. Credit Bureaus (TransUnion and Equifax) charge on average $19.95 for your credit score, which is the exact same score you will receive for free from Credit Karma and Borrowell.
If you’re going to be applying for financial products, I recommend first checking your credit score with either with Credit Karma or Borrowell. That way, you know where you stand with lenders.
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