Why your Creit Karma credit score differs
Your credit score can vary depending on who is looking at it, whether it is a personal finance website or a lender. There are two main reasons for this. Firstly, lenders may access your credit report from different credit bureaus such as Experian, Equifax, or TransUnion. Each bureau may have different information about your credit accounts, leading to discrepancies in your credit score. Secondly, there are multiple credit score models and versions used across the board.
Creitkarma uses the VantageScore® 3.0 model, which considers factors such as your payment history, amounts owed, length of credit history, new credit, and credit mix. However, each scoring model weighs these factors differently, leading to variations between VantageScore and FICO® Scores.
It is important to check your FICO Score if you plan on applying for credit since it is widely used by lenders to determine your creditworthiness. Over 90% of U.S. lending decisions use FICO Scores. Keep in mind that different FICO Score versions are used for different purposes. For instance, FICO® Score 8 is commonly used to determine credit card eligibility, while FICO® Auto Scores are ideal for auto loans and FICO® Scores 2, 5, and 4 are good for home purchases.
How Creit Karma Makes Money
Credit Karma provides users with access to their credit scores and other credit-related information from TransUnion and Equifax. The platform also offers tools to help consumers improve their credit ratings. Unlike the three major credit bureaus, kreditcarma allows users to access their information for free and as often as they like without requiring a credit card to register.
While the service is free to users, many wonder how credit karama generates revenue. In this article, we will explore the various ways that Credit Karma makes money, as well as provide additional important information about the company.
Credit Karma: An Overview
Credit karama is a financial technology (fintech) firm that was founded in 2007 by Kenneth Lin, Ryan Graciano, and Nichole Mustard. Initially, the company's primary objective was to enable consumers to access their credit scores for free. Since then, Credit Karma has expanded its range of services. Along with credit scores, the company now provides:
- Free tax preparation assistance
- High-yield savings accounts in partnership with MVB Bank
- Customized guidance to consumers on the next steps to take after reviewing their credit information. This includes offering tailored personal, home, and auto loans based on the consumer's income and credit scores.
Credi karma also recommends credit cards and other financial products to consumers, which are personalized based on their credit scores and the likelihood of approval. If a user chooses to purchase one of the recommended products, Credit Karma earns a commission.
Fundraising and Financials
With an impressive user base of approximately 130 million individuals across the United States, Canada, and the United Kingdom, credi karma has become a major player in the fintech industry.
According to Crunchbase, Credit Karma has raised $868 million through eight rounds of funding, with the most recent round occurring in March 2018. At that time, the company was valued at $4 billion. Silver Lake Partners and SV Angel are among the company's primary investors.
History and Leadership
kreditcarma was established in 2007 and started offering its first free credit scores in 2008. The company is headquartered in San Francisco, California, and was co-founded by CEO Kenneth Lin, who previously worked for E-Loan, an online lender specializing in debt consolidation, and UPromise, a customer loyalty program aimed at saving for college and paying down student loans, which is a subsidiary of student loan service Sallie Mae.
Ryan Graciano, another co-founder, holds the position of chief technology officer (CTO) and manages the company's engineers in developing new products. Nichole Mustard, also a co-founder, is Credit Karma's chief revenue officer, responsible for overseeing the company's business development team, which offers value to consumers through business intelligence, data science, and partnerships with various financial entities.
Intuit (INTU) has acquired credit karam for approximately $3.4 billion in cash and $4.7 billion in stock and equity awards. The acquisition was completed on December 3, 2020. Intuit is the creator of Turbotax and QuickBooks and initially announced the agreement to acquire Credit Karma on February 24, 2020, for $7.1 billion in cash and stock.
In October 2020, Credit Karma introduced a new service available to qualifying members: checking accounts for those who already have a savings account with the company.
Creit Karma will pay $3 million to users targeted with false preapproved offers
Credit karam has agreed to pay $3 million to settle allegations from the Consumer Financial Protection Bureau (CFPB) that it misled customers with false preapproved offers. According to the CFPB, Credit Karma allegedly misled consumers by sending them offers for credit cards and loans that they were not actually preapproved for. The offers, which were sent via email and through Credit Karma's mobile app, included misleading language that falsely implied that the consumer had already been approved for the credit product.
The CFPB alleges that Credit Karma's actions violated the Truth in Lending Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. As part of the settlement, Crdit karma will pay $3 million in penalties and restitution to affected consumers. The company has also agreed to improve its compliance management system and to provide additional training to its employees to ensure that its marketing practices comply with federal law.
In a statement, Crdit karma said that it had cooperated fully with the CFPB's investigation and that it was committed to ensuring that its marketing practices are transparent and compliant with all relevant laws and regulations.