The old maxim, “If it is too good to be true, it probably is,” holds up especially well in the world of personal finance. The concept of getting free credit scores has been mined by con-artists and scammers repeatedly. Unfortunately, most of these scams are perpetrated by well known companies and by the credit reporting bureaus themselves.
The free credit score scam usually goes like this. A company offers to give you a “free” credit score. To get your free score you have to sign up. If you don’t read every word on the screen or printed on the page very carefully (especially the ones in fine print), you might think that you are just signing up to get a free credit score. Gotcha!
What you are actually signing up for is a “free” trial membership in the company’s credit monitoring service. The trial is free for 30 days, or 90 days, but at the end of the free trial, you automatically subscribe to the fully paid subscription. This is why you had to enter a credit card number when you signed up. If they actually had to collect money from you at the end of your free trial, everyone would say, “No thanks.” Instead, they use that credit card to automatically bill you. Most of the time, they bill you for the whole year, in advance, all at once. That way, by the time you notice it on your credit card bill, it is too late for you to back out and get a full refund and since there is no way you want to legitimately subscribe to the service, they get you for 12 months instead of one month.
Worst of all, is that they will automatically renew your subscription when it expires, so 12 months later when you’ve forgotten all about how they screwed you over in the first place, they can do it all over again. It stinks of fraud, but all of the “disclosures” are made (again in tiny print, or buried in a six-page document), so technically it passes legal muster.
Transunion, Equifax, and Experian all pull this marketing scam on their own websites, right next to the part where they try to trick you into getting your “free” credit report that isn’t really free either.
Don’t forget you can get a real free credit report every 12 months (that’s once a year) by law. Don’t ever pay or subscribe to something to get your legitimate free credit report.
Tip: If you have to enter a credit card number, you are getting scammed. Real free credit reports DO NOT require you to enter a credit card number at all.
Free Credit Report from Credit Karma Scam Too?
Knowing all of this about how credit scores work and how credit repair scams an the like go down, I ignored the offer of “free” credit scores from Credit Karma. Scam, scam, scam, I thought.
But, then, I read a write-up about Credit Karma by a financial journalist that I happen to trust and respect. (It is a very small club.) That got me wondering about how it could be true that Credit Karma gives you your credit score for free.
With a legitimate financial writer’s endorsement in mind, I decided to try out Credit Karma. However, I did it very warily.
First, I signed up for a new email address to use so that I would know if Credit Karma sold my email address or spammed it with credit card offers.
Next, I obtained a one-time use online credit card number from one of my credit cards and set the amount to $1 (the lowest allowed) and the expiration to the next month (the shortest allowed.)
Then, I went to Credit Karma’s website at www.creditkarma.com
(There is no link, because I want readers to know that I do not get any sort of kickback, payment, or referral bonus for this review of Credit Karma.)
Is Credit Karma a scam for free credit scores? Let’s find out.
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Tags: credit karma, credit monitoring service, credit reports, credit scores, free annual credit report, online deals, Personal Finance
26 Comments on Credit Karma Scam or Legit Free Credit Scores?
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Been using CK for almost a year. Have no problems. Recommended it to friends who love it to.
[...] before you file. To avoid having to pay, get a free credit score from CreditKarma.com. (See my Credit Karma scam article and my CreditKarma.com review article for more details.) You may, however, want to wait to [...]
[...] online. At first, many people, including me, were worried that the whole thing was just a big Credit Karma scam. However, after doing some research into whether Credit Karma is legit and even doing an in-depth [...]
[...] Update (January 2012): You should see about this CreditKarma.com free credit monitoring review along with your free credit score. See my CreditKarma.com review for a complete look of Credit Karma. Also check this if you are worried about the whole thing being just a Credit Karma scam. [...]
I have been using credikarma for more than a year. They seem to have most of the account info correct. However, the scores are way off. Creditkarma says my score is above 750, but mortgage company just pulled my score the next day and all 3 scores are between 670-680. That’s way off.
I’ve been using it for the past few years and it is a good indicator of your credit health when you are in-between your big three official report pulls. No major problems so far.
I’m going to try it out, and let y’all know my experience.
I loged into CreditKarma. I decided not to tell them my annual income but filled in all the rest. They didn’t ask for any information about my credit cards. When I got in…. My major credit card I own was not listed and they indicated I had no cards. I couldn’t find a way to get a “credit report”. None of the above big three sources of credit scores were mentioned. My credit report was only 680 “fair” my payment history was “F” less than 96% on time when it is actually 100% on time. What do you think about all this? I am suspicious. Please tell me what is going on here.
I don’t work for Credit Karma, so I can’t really say. I know that they use the information on your TransUnion credit report. So, unless the information shows up on that, they won’t know about it. You might want to check your credit report and see what it says. Use the real free credit report website and not one of the sign up for a free credit report websites. Otherwise, I have no idea why there would be such a mismatch. I’ve never heard of that before.
I have meet with different credit counselors from my bank and they have recommended creditkarma. One thing for sure is the Experian score is the score most companies/financial institution uses when they are assessing your score. I dont think creditkarma has anything to do with the score being off, since if you pull all three scores you will still see a difference between Transunion, Equifax, and Experian.
Note that there are 2 sites that use credit karma in their addresses, creditkarma and credit karma. creditkarma is the one that is free and I feel, very useful. Not sure about the other one. But creditkarma has good advice and will let you see how to raise your score, which varies according to which of the big 3 companies a report is pulled from. Recently I got a personal loan and my bank sent me my fico score (from experian)which was different (by many points)than another company, (transunion)so there you go.