Financial decisions can make or break your future. One of the most important factors would be choosing the right loans for essentials needs such as housing, mortgage, auto and debt consolidation. You wouldn’t want to spend beyond your means or be buried in financial debt.

You might need to make use of financial services which can aid in making the best financial decisions for you. This gives you an overview of your eligibility when applying for certain loans. But before you proceed to using such services, make sure that you have enough and accurate knowledge about it.

Just like when using Credit Karma, a legitimate financial service that provides access to free credit scores and reports. If you’ve seen it online and want to know more about how it works, we’re answering five of the biggest questions about Credit Karma.

How Do Credit Scores Work?

How Credit Scores Work How Credit Scores Work Photo: Credit Karma/ creditkarma.com

Before going into an in-depth review of Credit Karma, you should know what credit scores are.

Credit scores are one of the key elements in finance, which determines the likelihood of risks if money will be lent to you. Banks use this as reference to tell whether a client will be able to pay back their debt.

With higher credit scores, it qualifies you to apply for loans with more favorable terms, such as low interest rates and fees. This is why it’s important that you understand how credit scores work to know which offers you’re eligible for.

Credit score is evaluated by using a credit score scale that ranges from 300 to 850. This is one of the most commonly used models, especially in banks. The following is a list of credit score ranges and their meanings.

  • 300 to low 600s: This indicates that you have a low credit score, hence, it would be harder for you to have loans approved and seek favorable offers. However, this does not mean you aren’t eligible to apply. You can still get secured credits cards, which can help build your credit.
  • Low 600s to mid-700s: This falls under fair to good. It may make more offers available compared to a low score; however, it still won’t be easy to apply for loans. It’s suggested that loans with preapproval options would be helpful in identifying which loans you quality for.
  • Above mid-700s: With this, you’re most likely to get approved for a loan with low interest rates and good repayment terms as it is considered the highest range for credit scores. Do note that banks still investigate the high debt to income ratio when it comes to lending money to clients.

If you’re planning on building a good credit score, here are some tips to take note of.

  • Monitor your reports
  • Make sure to pay on time
  • Pay in full (if possible)
  • Keep your old credit accounts
  • Consider a credit mix

How Does Credit Karma Work?

Credit Karma Business Model Credit Karma Business Model Photo: Credit Karma/ creditkarma.com

Credit Karma is an online financial service that offers free credit reports and credit scores. It helps improve your future when it comes to making financial decisions. One of its most efficient features is that it works with major credit bureaus such as Equifax and TransUnion to provide all the information you need about your credit information and scores.

The company applies a simple but reliable business model which guarantees improvements in your credit score.

  • Receive credit scores and reports: Once a member, it will provide a free credit score and report which you can monitor weekly.
  • Make recommendations: The company provides as well as analyzes data and offers personalized recommendations that can be used as a guide in making better financial decisions.
  • Getting paid by the bank or lender: You might think that the free offer is quite odd but the company guarantees that once you get a product based on their recommendation, it’s the bank or the lender that'll pay for their service.

Is Credit Karma Accurate?

Credit Karma is accurate Credit Karma is accurate. Photo: Credit Karma/ creditkarma.com

Credit Karma provides information directly from TransUnion and Equifax, which is one of the reasons why they require a Social Security number. This is to ensure they’re getting the correct information for your account. It gathers the VantageScore 3.0 credit scores. If you ever experience receiving different information from other bureaus, consider that lenders may not report to all bureaus and they may use different credit-scoring models.

Is Credit Karma Free?

Credit Karma is free Credit Karma is free. Photo: Credit Karma/ creditkarma.com

Yes, Credit Karma offers its services for free. They provide the VantageScore 3.0 credit models created by bureaus they are working with. You can also check your credit scores anytime, especially when you want to keep track of your data. This enables you to slowly build a better financial future over time.

Is Credit Karma Safe & Legit?

Credit Karma Safety Credit Karma Safety Photo: Credit Karma/ creditkarma.com

Since Credit Karma will be asking for your personal and financial details, you might worry about it getting leaked. However, it guarantees that they do not share any information with unauthorized third parties and they have a reliable security system such as a 128-bit encryption to keep your data safe. It will also alert you when there is a sudden breach of information.