Some years ago, Marvel and Star Wars weren’t owned by Disney, Intagram and WhatsApp weren’t owned by Facebook (now Meta), and Credit Karma wasn’t owned by Intuit.
Alas, times have changed. Luckily, Credit Karma as a product hasn’t changed much since its acquisition. It still offers reporting through two of the three agencies. It still floods you with offers for personal loans, new credit, and more. (They’ve gotta run a business somehow, right?)
Credit Karma is packed with useful insights for your credit
If you’re looking to improve your credit score, Credit Karma is a great resource to help you understand what factors are impacting your score. Credit Karma offers credit reports from two of the three credit agencies, TransUnion and Equifax, and provides targeted offers for personal loans and credit cards based on your approval odds.
If you’ve setup you Credit Karma account (recommended), go ahead and click whichever score is lower on the main screen. This will bring up more details. Scroll down and you’ll find a number of items, including:
(High Impact) Payment History
One important factor that impacts your credit score is your payment history. If you’ve ever missed a payment on a credit card, it can have a negative impact on your score for an extended period of time. If you see a missed payment on your Credit Karma account that you don’t recall, you can dispute it with the credit agency. You should also check your “total accounts” detail page to make sure there aren’t any unfamiliar accounts listed.
If you want to improve your payment history score, you can find someone in your life who has a long history of good payments on a specific credit card. Have them add you to their card as an authorized user. Both family and friends are able to do this for one another. If there is ever an issue, you can have the bank remove you. Both the good and the bad will drop off your report within 30 days of removal.
(High Impact) Credit Card Use (or credit utilization)
Another factor that affects your credit score is credit utilization, or the amount of credit you use on your credit cards. It’s generally recommended to use less than 10% of your available credit on any individual card at any given time. Credit card companies will often rate you higher if you maintain a small balance on your cards, as it indicates that you’re not a high-risk borrower.
(High Impact) Derogatory marks
Derogatory marks, such as collections, tax liens, bankruptcies, and civil judgements, can also have a negative impact on your credit score. While these issues can be difficult to deal with, bankruptcy can sometimes be an effective way to reorganize your finances if you work with a reputable bankruptcy attorney.
(Medium Impact) Credit Age
Additionally, your credit age, or the length of your credit history, can also impact your credit score. Establishing a long credit history by opening new accounts and paying them off on time can help improve your credit age. However, opening too many accounts in a short period of time can have a negative impact on your credit score, so it’s important to be mindful of this balance. You may also consider being added as an authorized user to a friend or family member’s card, assuming they have a good history of timely payments.
(Low Impact) Total Accounts and Hard Inquiries
In addition to payment history, the number of accounts you have and the number of hard inquiries on your credit report can also impact your credit score. Having a large number of accounts can be seen as a sign of financial responsibility, but it can also be a red flag if you have difficulty managing all of them. Hard inquiries, or requests for credit, can also lower your score, especially if you have a high number of them in a short period of time. It’s important to be mindful of these factors as you work to improve your credit score.
Credit Karma Recommendations Tab
The targeted ads here can be very insightful. Specifically you can get an idea of what cards might be available based on your credit history.
Here are some examples and suggestions:
Credit building or rebuilding cards include Discover Secured, Capital One Secured, and OpenSky Secured.
Low-tier (easy to acquire, good rewards) cards include Capital One Quicksilver, Discover It, and whatever is offered by your existing bank / credit union (assuming you have a historical relationship with them).
Mid-tier (medium to high performance) cards include Capital One Venture, Citi Double Cash, Chase Sapphire Preferred. (Often these will have annual fees of up to $100/year)
Premium tier (best performance, highest annual fees) includes: Capital One Venture X, Chase Sapphire Reserve, American Express Platinum Card. (annual fees of up to $600/year)
Other Credit Karma Features
Personally, I would not recommend using the features built-in for auto-loan servicing or home-loans either. You are way better off using an institution where you’ve held an account for some time.
The “Accounts” tab is a great spot to review all the existing credit relationships that are being reported to the agencies. Here is helpful information for disputing something on your TransUnion report:
https://www.transunion.com/credit-disputes/dispute-your-credit
And for Equifax: https://www.equifax.com/personal/credit-report-services/credit-dispute/
Also, since Experian is the only provider not included in Credit Karma, you can see how to access that report here: https://www.experian.com/consumer-products/free-credit-report.html
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If you have any further questions, please email me!
daymonet.contact@gmail.com
Or if you would like to book a free credit health intro consultation, you can do that here: Calendly.com/DayMonet
