For a few years, Credit Karma has been offering a product that lets consumers see what lenders and employers see when they look at the consumers’ credit reports. After securely and privately providing your personal information, Credit Karma retrieves your credit report from one of the credit reporting bureaus, either Experian, Equifax, or TransUnion.
Credit Karma then analyzes your details and assigns a grade, A through F. The various categories receiving grades relate to the items that determine your credit score. Lenders review these items when deciding whether to extend credit to you, how much credit to extend, and at what cost.
This is a free service, supported by advertising.
Yesterday, Credit.com announced they will also be offering a similar free service, providing a credit report card to help you evaluate and improve your credit report.
So which service is better? I took both services for test drives.
Credit report cards
Here are some of the most obvious differences. Credit.com assigns grades to the following categories: Payment history, debt usage, credit age, account mix, and inquiries. Credit Karma’s categories are similar: Open credit card utilization, percent of on-time payments, average age of open credit lines, total accounts, hard credit inquiries, total debt, and debt-to-income ratio. More categories, and therefore more information, is more helpful.
To look further into the health of my credit, Credit Karma offers charts in each category, placing my result within the spectrum of results from the Credit Karma Community, all users of the website. So I can see, for example, that the grade of “C” Credit Karma gave me for “Total Accounts,” which includes how those accounts are divided among revolving credit accounts and loans, puts me in a group of users who received an average score of 683, significantly lower than my score.
This tells me I’m doing well enough in the other categories to make up for this deficit but improving my mix of accounts will improve my score further.
I also received a grade of “C” from Credit.com for the “Credit Mix” category. Credit.com doesn’t offer a chart, but it does include details about my types of credit (23 revolving credit accounts, 0 mortgage loans, 1 auto loan, 6 student loans) and excellent suggestions for specific actions I can take to improve in this category.
Here are some screen shots. Click on the thumbnails to see the full-size images.
Credit.com rewards me with an “A+” for the Credit Age category while Credit Karma believes my accounts warrant only a “C.” This discrepancy is due to the underlying information retrieved from the credit bureaus. According to Credit.com my oldest account is almost 15 years old (established in 1994) while Credit Karma sees accounts dating back only five years. The information provided by Credit.com is more accurate; I received my first credit card in 1994 and it has never been closed.
As you can see in the graphics above, Credit.com offers you a range for several different types of credit scores. The one that matters the most is often the FICO® Score. Credit.com places my score in the range of 750-850. On the other hand, Credit Karma offers one exact score directly from one of the reporting bureaus. It is not a FICO® Score, however.
One important piece of information to note is that throughout the site, Credit.com asks you to “upgrade to a full report.” This is a 3-bureau credit monitoring service for $14.95. For most people, this is an unnecessary service. For those who need credit monitoring services, there are lower cost options. In fact, as Smithee mentioned yesterday, AAA offers some customers free credit monitoring.
Credit Karma offers links to products such as bank accounts, insurance, and money management software. Some of the products will pay a fee to Credit Karma if you sign up through this website.
In this case, Credit.com wins due to the accuracy of the information. This is not Credit Karma’s fault, however. Credit Karma does have a strong plus: this site provides an exact credit score while Credit.com offers only ranges. And through using Credit Karma, I’ve discovered that one of my credit reports does not include my full history. I will need to review all three credit reports at the respective bureaus to find and fix any problems if possible. If I seek a mortgage, it is possible for a lender to evaluate me based on the same information that was provided to Credit Karma, so it is worthwhile to check all avenues.
Credit Karma also uses a “social engine;” you are compared and evaluated among the community of Credit Karma users and the suggested product offers you receive result from user feedback. For me, this is not a strong need, but others might find these social features useful.
Both these services are free, and it takes very little time to provide your personal information and verify your identity. You receive your credit analysis immediately after doing so. Although Credit.com gets my vote at the moment, there is no harm and no cost in using both services.
Updated April 20, 2017 and originally published September 30, 2009.