The word karma can be defined as “the effects of a person’s actions that determine his or her destiny in his next incarnation.” The idea of karma is most widely believed by those who follow Hinduism and Buddhism, but Credit Karma is something entirely different. Unlike future incarnations, the effects of your actions in this lifetime will affect 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 of sorts. This overview covers your credit report and score, savings account advice, credit card guidance, and other financially specific resources. Unlike other credit reporting sites, you’ll find two major differences that exist in the Credit Karma philosophy:
- There is no monthly trial membership or initial credit card charge for signing up
- You are not given an actual credit report to view, only a credit report card. This report 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 a personal dashboard that shows you an immediate credit summary. This includes:
- TransUnion and Equifax Credit Scores — This is not your FICO score, but your credit scores from two of the three major credit bureaus, TransUnion and Equifax. These will give you a very good idea of where you would stand with your true FICO, though. You can also see the difference between the information each bureau is receiving, to determine where any differences in score may be originating.
- Credit Impacting Accounts — These include reported delinquencies, inquiries, collections, credit utilization, and your average age of accounts (AAoA). You will also see the discrepancies (if any exist) between what is being reporter to TransUnion and what’s reported to Equifax.
In addition to what you initially see, there are also additional tabs, sections, and features with tons of information about credit, savings, loans, and many other financial topics. The perks that come with signing up for a Credit Karma account are found in some of their neat resources, which you simply can’t find anywhere else.
One big aspect of the CreditKarma.com genius is their credit simulation feature. This tool can help you predict how your credit score will be affected by certain actions. Do you plan to close a credit card, or purposely make a late payment because you can’t afford to send the check on time? Well, using this simulator, you can determine whether or not your credit score changes with each action.
You can simulate all of the following:
- Open 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
Another cool feature is the Credit Factor report. This tab allows you to get a birds-eye view of your credit report according to TransUnion and Equifax. You can see exactly how much of your credit is being utilized, how many collections or late payments are being reported to each bureau, the number of inquiries you’ve racked up, etc. And what’s always interesting to me is that they are almost never a perfect match between the bureaus.
You may be used to checking your credit through only one or two bureaus. However, it would be very useful to check at least two, if not all three. Having a compare-and-contrast option within Credit Karma’s dashboard makes this simple and quick.
There are plenty of other smaller features within Credit Karma 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 outside 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, Credit Karma is an reasonable option to help you better understand how your credit report and score will effect your financial future.