The word karma can be defined as “the effects of a person’s actions that determine his or her destiny in his next incarnation.” Karma is most widely believed by those that follow Hinduism and Buddhism but the term credit karma is something entirely different. Unlike future incarnations, the effects of your actions in this lifetime will effect your credit score … for a period of seven to ten years.
CreditKarma.com is a website that can help you control your finances by providing a report card regarding your credit report and score, savings account advice, credit card advice and other financially specific resources. Unlike other credit reporting sites, you’ll find two major differences that exist in the CreditKarma philosophy.
- There is no monthly trial members or initial credit card charge for signing up
- You are not given an actual credit report to view, only a credit report card which outlines the main categories of your credit report like inquiries, past due balances, bankruptcies etc.
When you log into your account, you will land on an account summary page that shows you two immediate CreditKarma features:
- TransUnion Credit Score – This is not your FICO score, simply a credit score from one of the three major credit bureaus, TransUnion. CreditReport.com uses the same bureau for their credit scores so if you have an account with them, your information should match (If your credit was pulled on the same date)
- Featured Savings Accounts – If you’re always looking to improve your financial situation, CreditKarma lists savings accounts with the best interest rates.
In addition to what you initially see, you will find a boatload of additional tabs, sections and featured with tons of information about credit, savings, loans and many other financial topics. The coolness that comes with signing up for a CreditKarma account comes when you check out three resources that you simply can’t find anywhere else.
Credit Report Card
The credit report card that CreditKarma.com provides is a snapshot of your regular credit report when compared to others. Based on your credit score, open accounts, on-time payments, age of credit accounts, total accounts, hard inquires, and credit to debt ratio, you are given a grade from A to F. You can see from the example above of just how the layout will look in your account and in addition to an overall credit grade, you are also graded on each category.
My particular grades are deplorable, mostly due to a mountain of student loan debt that is a work in progress. Each sub-category can be further broken down to show you where you rank among all consumers and what you need to do in order to improve your grade. For example, in order to achieve an A for “Percent of On-Time Payments” I would need to have 100% paid on-time. I dare to dream.
The second step to the CreditKarma.com genius is their credit simulation feature that can help you predict how your credit score will be effected by certain actions. Do you plan to close a credit card, purposely make a late payment because you can’t afford to make one on time? Well using this simulator you can whether or not your credit score changes with each action. Because my credit score is already in the tank, few of the things I simulated actually made a difference but CreditKarma provides a long list of available changes. You can simulate all of the following:
- Add a New Credit Card
- Add a New Loan
- Add Credit Inquires
- Increase the Credit Line on One Card
- Open a New Credit Card and Transfer Your Balances
- Close Your Oldest Credit Card Account
- Increase or Decrease Your Credit Card Balances
- Pay Off All Credit Card Balances
- Allow ONE Monthly Payment To Become Past Due
- Allow ALL Monthly Payments To Become Past Due
- Have An On-Time Credit History
- Add Public Record To Your Account
- Have One Account Go Into Collections
The last of the coolness comes from the credit compare feature that pits your credit report against others just like you. Some of the information is of little value, like the fact that I rank better than 17.3% of people who have email address at MSN.com but other information is good to know. I am classified by my state, my age, my gender and other CreditKarma.com users and I suck at everything!
There are plenty of other smaller features within CreditKarma that help consumers manage their loans, savings and CD accounts, credit cards and almost any other financial account you can think of. The site also has its fair share of credit card and free-trial offers because providing a free service means they have to make money somehow. If you can avoid signing up for offers and don’t mind providing your contact information to a third-party provider, CreditKarma is an reasonable option to help you better understand how your credit report and score will effect your financial future.