Budgeting & Finances Lifestyle

Credit Karma Review: 1 Year In

Credit Karma Review: 1 Year In. Proven ways to improve your credit score and how I increased my score 100 points in a year.

Saving more money has been a focus for my family for quite some time. Over the past year, I’ve come to realize how much your credit score impacts financial health. Good scores give you access to the best interest rates, access to rewards cards and puts you in good standing with lenders. I decided to write a Credit Karma Review so I can share some of the things I’ve learned.

I’ve been using Credit Karma for just over a year now, and I have mostly good things to say. Overall, I think it’s a good resource for anyone looking to monitor their credit, boost their credit health or manage debt. However, there are a couple drawbacks to be aware of. In this Review, I’ll walk you through the features I like and let you in on how I boosted my score 100 points. I’ll also explain some things to keep in mind.

Credit Health Overview

What’s a Good Score?

That kind of depends, actually. A good score will, generally, have a 7 in front of it. You are a good candidate for any type of loan or card with 700 and higher and can receive better rates. However, lower scores are sometimes accepted.

For example, you can technically get an FHA loan as a fist time home buyer with a score as low as 580. Some will grant conventional loans with scores in the mid 600 range. However, the lower your score, the worse your interest rates will be. This can greatly affect the affordability of your payments. Make it a goal to get your credit in the 700 range as soon as possible!

I’ll explain the features that can help you get your score up later on in this post. If you need goal setting help, check out my four Goal Setting Game Changers to help you get on track.

How’s your Score Determined?

There are 6 key factors in determining your credit score. Working on any or all of these areas will improve your credit. (Here’s how Credit Karma explains how to understand credit scores.)

  1. Payment history
  2. The age of your credit
  3. The types of credit you have (credit cards, auto loans, student loans, mortgages, etc.)
  4. What your credit limits are and your usage percentages
  5. The amount of debt you own
  6. The number of hard inquiries on your report

Each of these has a differing degree of impact on your score. For the purposes of this Credit Karma Review, I’ll focus on the biggest hitters.

The worst offenders are any derogatory marks (bad debt), late payments and using too much of your credit limit. Here are 3 proven ways to increase your score:

Derogatory Marks

These are bad news. Even one derogatory mark will greatly impact your score. These can be accounts in collections, tax leins, bankruptcy and other public records. A lot of people have accounts in collections that they don’t even realize or remember.

Little things can come back to haunt you like a final payment on a phone that got lost in translation or a missed utility bill. Taking care of these issues are crucial for a good score.

Late Payments

Always shoot for 100%. Even if you make your payments 98% on time, this is considered mediocre, and anything below that is trouble territory.

If you struggle with this, look into setting up auto payments.

Credit Limit

Under 30% credit usage is considered good. Consistent, on time payment and good credit usage can boost your score. It will also increase your credit card limit over time.

Credit Karma Features

Credit Karma has several great features. In this Credit Karma Review, I’m highlighting each feature that provides the most benefit. The service tracks all open and closed accounts and any accounts in collections from TransUnion and Equifax and provides weekly updates.

Alerts

Credit Karma Review Alerts Feature Example Email Notice

Credit Karma will alert you when any accounts are opened in your name. This can help you discover fraud.

You will also receive alerts any time your scores move up or down. And, if any of the amounts of your good or bad debt increases or decreases they will let you know.

Tips & Suggestions

They also give you “pro-tips” catered to your credit profile to show you how to make improvements. You can always see your credit utilization and details on how you are fairing in each of the 6 ways your score is determined.

Credit Karma will regularly suggest types of credit to apply for and specific cards and companies to work with. These suggestions are made specifically to help improve your scores and for which you are most likely a good candidate, based on your credit worthiness.

Credit Karma Review Tips & Suggestions Feature, Example Email

If your credit is in particularly bad shape, you can even obtain a “secured” credit card. You fund the card with your own money. Your credit limit will be low (the amount you find), but it gets counted as in good standing. This can jump start your credit history.

For more help, you can now chat online to receive more specific assistance.

Identity Monitoring

This is a fairly new feature. I haven’t looked into it that much, but I was alerted to two possible breaches that my information might have been involved in. I haven’t seen any effects from either breach, but it’s good information to have.

How I Boosted My Score 100 Points

Since you clicked on a post about a Credit Karma Review, you’re probably eager to know how my score improved. Increasing your credit score can take time, especially if you are on the lower end of scores. However, consistent good practices and resolving any derogatory marks will make a big impact.

I have been able to improve my score 100 points over the past year. This is the reason why I decided to write a Credit Karma Review.

The first improvement I made came as a surprise to me.

Missed Payment

I have a credit card that I don’t check on all that often. It’s used for specific fixed payments and is supposed to automatically be payed off from my bank account each month. Credit Karma alerted me to a failed initial payment that I thought I had set up. In my mind, I was dotting all my I’s and crossing my T’s, but somehow I missed this mistake.

That missed payment was negatively affecting my score in a significant way. I wasn’t clearing the credit card down to zero each month and it was putting my usage percentage above an acceptable limit. Once that was corrected, I saw a pretty quick up-tick in my score.

New Card

Credit Karma also pointed me to a useful card that I applied for and received. I saw a bump of about 50 points in just a couple months from using that card correctly and consistently. And, I’ve seen little bumps incrementally here and there since.

I wouldn’t have had knowledge of these two things without the service and they were super easy to implement.

Biggest Credit Karma Drawbacks

My Credit Karma Review wouldn’t be complete without sharing some drawbacks. After using the service for a year, my biggest complaint is that Credit Karma shows me somewhat conflicting information.

If you read Credit Karma’s description of how to understand credit scores, then you know you have more than one score. Depending on who’s asking and when they ask, your credit can be pulled from differing sources.

What I’ve found, though, is that often bigger lenders like to use your FICO score. I’ve come to realize that my FICO score is pretty different than what Credit Karma lists under my TransUnion and Equifax scores. My FICO is actually quite a bit higher. I don’t have access to my up to date FICO score for free as often as I do my scores through Credit Karma so it’s a little confusing having that disconnect.

The last time both were available and up to date, they were more than 50 points apart. Your FICO score is calculated using the info from the three major bureaus, so I can only assume my Experian score is a good bit higher than what I’m seeing in credit Karma.

Which leads to my second complaint with Credit Karma. It only shows you information from two of the three major credit bureaus so you get less of a complete picture of your overall credit health. Experian data is not included.

Do I Recommend Credit Karma

Yes. Though it’s never going to show you the exact number a lender will pull when checking your credit, it does provide a lot of useful information. On top of that, their alerts, tips and suggestions, are incredibly helpful. It’s a good resource to see the trajectory of your credit health and to find easy ways to make marked improvements in a timely manner.

I hope you found something helpful from this Credit Karma Review. Let me know in the comments if you have any other questions you’d like me to answer, or if you have any other credit score improving tips!

This Credit Karma Review is not a sponsored post!

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