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October 19, 2009

My thoughts on Credit Karma's free credit score

A reader named Marie posted a comment yesterday in response to my post about's free credit scores - see  Marie wanted to know my thoughts on Credit Karma's free credit scores. 

After getting over the initial shock of one of my faithful readers actually asking a question (which is what I initially hoped this blog to receive a lot of), I reviewed Credit Karma's website as I had never heard of Credit Karma before Marie's comment.  I thought, perhaps, Credit Karma is a distant cousin of the mythical Credit Fairy, which I posted about here

As it turns out, Credit Karma is a lot like  It claims to provide free credit scores for those willing to register on its website.  It claims it pays for the costs of obtaining the credit scores by utilizing advertising dollars from selling ad space on its website. 

My initial thought was the same as, i.e. the site provides "a" score but not necessarily "the" score that your creditors receive.  That's because many large creditors utilize their own unique scoring models so there's no way to see that score before you apply (and maybe not even after you apply) to those creditors for credit.  Smaller creditors use standard scoring models, such as FICO.  Its possible that Credit Karma also uses a standard scoring model, but I searched their website up and down and could not find even a hint as to what scoring model they use.  Therefore, Credit Karma, like, is good for finding out generally how your credit score fares but don't count on it to be exact.  But, at least its free to find this out using Credit Karma or, whereas you'd have to pay the credit bureaus to get the same "almost" score.

One thing that did concern me about Credit Karma is how do they get your score without it being a hard inquiry on your credit report.  When you buy your score from one of the three credit bureaus, it does not impact your credit score because it does not count as an inquiry against your credit report.  However, when a third party accesses your credit report (i.e. to get the information needed to generate your credit score), it will show up as a hard inquiry and thus, potentially, negatively impact your credit score. 

Yet, Credit Karma claims the opposite.  Here's what they say on their FAQ page:
Will using Credit Karma lower my credit score?

No. Credit Karma is making the credit score request on your behalf. Inquires made on your behalf will not be shown to creditors and will not affect your credit score.
Maybe Credit Karma is some subsidiary of one of the three credit bureaus and that's how they accomplish getting your score without causing a hard inquiry.  Otherwise, I don't see how they do it and am a bit suspicious. 

Have any of you out there gotten your credit score via Credit Karma and then looked at your full report to see if a hard inquiry showed up?  Or have any of you used Credit Karma at all?  If so, I (and maybe Marie too) would be interested in hearing what you found.


  1. Hi Chris. Thank you so much for your great review. (Sorry I gave you your own URL, but glad you figured it out.) I am still fascinated and perplexed by how they can offer this service - as far as the scoring goes. Of course, I don't know how close their score is to my real score since I've never paid for my real score.

    I used Credit Karma a couple times, and have looked at my credit report since then. I could find nothing to indicate that anyone pulled my credit (neither the kind that may impact, nor the kind that will not impact) on or near the two dates I did Credit Karma.

    Just out of curiosity, I put the address listed on their Terms of Service in Google Maps and was interested to see that it's upstairs from Kate O'Brien's Irish Pub in San Francisco. (It or its general counsel, that is.)

    Again, thank you.

  2. Hi Chris,

    On the subject of "hard inquiries" - When and CreditKarma pull your credit report, it's considered a "soft inquiry" because it's for your own educational purposes and not for the purpose of issuing you credit or a loan. Under the FCRA, it's considered "written instructions." These "soft inquiries" will NOT affect your credit score. Hope that helps!


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