How Credit Karma Makes Money?

How Credit Karma Makes Money?
Credit Karma: A fintech services company that is helping you with your credit scores and finances, founded in 2007 in San Francisco by Ken Lin who is the current CEO as well and an experienced person as he has worked with other relative forums like UPromise, E-Loan so he knows everything about student loans, finances, credit scores, and debt issues.

The major issue that people were facing with all the credit score companies is they were not able to get a free report, Lin thought about that and founded Credit Karma with the aim to provide free services and started giving free credit scores in 2008 just a year after the launch, as well as Credit Karma, is offering credit scores from TransUnion and Equifax with all the credit information that you may be asking for free.

If you ask "How does Credit Karma make money?" directly to the CK team, they will say that when you use Credit Karma for anything like credit scores, savings, rewards or debt relief, they will give you the tools for free and in return, they will never charge you a dime but show some relative advertisement that could be a credit card for your needs from a bank and when you order that card, they get paid from the respective bank.

So, you get access to Credit Karma's information for free and even without the need of registering your credit card with Credit Karma as its not a basic need for their tools. Credit Karma's consumer tools are available for free and for everyone that can help you boost your savings and improve credit rating just like any other personal finance expert.

How Credit Karma Makes Money?

As they said, they make money by recommending different products to you when you are using their services for free. This is not a big deal, yeah?

Well, that is a big deal. Because all the competitors to Credit Karma don't provide free credit score information more than once in a whole year. That is a pain for the users and especially for students and small businesses, they want more repeated reports for free and here's the when Credit Karma wins with unlimited free cred score information reports.

As Credit Karma is winning the game against other top credit bureaus, people trust Credit Karma and when it recommends a product like a credit card, most people order a credit card that is made for their needs. That's when Credit Karma makes a commission and earns money from your spendings.

So here's the step-by-step guide for how credit karma makes money:
  1. They ask you to signup without registering your credit card
  2. When you get into the dashboard, you get all the tools for free
  3. You can generate free credit information reports and enjoy other tools
  4. Credit Karma recommends you a credit card or any other product according to your needs
  5. You say yes and order that credit card or a product
  6. Credit Karma makes money by charging a fee to that product maker or gets a commission for the recommendation
As you don't hesitate to use Credit Karma services as they are offering everything for free, they just recommend a relative product, you buy and they get paid, that's how the affiliate marketing industry is winning today with offering free services to the consumers and playing without showing boring ads.

Statistics of Credit Karma

With some big names in lead investors like Silver Lake Partners and SV Angel, if we first talk about fundraising and financials, Credit Karma was valued $4 billion in 2018 and at that time Credit Karma was able to raise $868 million in over 8 funding rounds and with more than 100 million active users (as of 2020) in the United States, Canada and also the United Kingdom, Credit Karma is leading the free finance-tools industry.

Privacy of Credit Karma members

They just don't sell your personal information or finance-related data with any unaffiliated third-parties, making Credit Karma the safest platform your credit information, they also provide guides on how you could save more money doing the things you want in your life from the mortgage loan, auto loans to best credit card that suits your needs, they recommend more products that can help you further enhance your credit planning.

Latest Features of Credit Karma

Credit Karma is not just sitting with some free tools, they are up and running and now offer the next big tool "Credit Karma Tax" which is another free tax preparation tool that is really awesome for companies, businesses and individuals as well. Guess what? with the Credit Karma Tax tool, you can easily file your tax and automate the tax filling by linking your tax filing to Credit Karma's Savings account (partnership with MVB Bank). This is really a helpful tool for making your tax digital and available for free.

Acquisition and Competition

When we have a free service, we get more competitors and that's the same thing happening with Credit Karma as NerdWallet, Credit Sesame, and Mint are the direct competitors to Credit Karma by offering free credit information services and also many other tools for free.

However, on February 24, 2020, an American Software company "Intuit" announced that it was purchasing Credit Karma for a whopping $7.1 billion in cash and stock.

Everybody can now install the Credit Karma app and perform credit karma free credit check whenever they need it.