Credit Karma Canada Review:Free Credit Score and Report
Canada has two credit bureaus which calculate and communicate credit scores: Equifax and TransUnion. Both of these credit bureaus allow you to obtain one free credit report every year. Although, what if you want to check your credit score more often than once a year? This is where companies like Credit Karma come into play.
Credit Karma is a free service that allows individuals to check their credit score and report at any time. This is a helpful service for individuals who are working towards financial goals. To learn more about Credit Karma and the quality of the services they provide, continue reading below.
About Credit Karma
Credit Karma gives Canadians the opportunity to view their credit score, credit report and routinely monitor their credit for free. Prior to companies like Credit Karma, Canadians were required to pay to obtain their credit information. Credit Karma displays information from TransUnion credit bureau.
Credit Karma is an American company and was founded in 2007. The company expanded into Ontario, Alberta, Manitoba, New Brunswick, British Columbia, PEI, Nova Scotia, Saskatchewan and Newfoundland and Labrador in 2016.
Since Credit Karma’s services are free, many people question how the company makes money. The answer is the company makes money by referring their users to financial products based on their credit profile. If one of their users applies for these financial products, the issuing bank will pay Credit Karma a referral fee. Keep in mind that if you sign up for Credit Karma you will receive these recommendations.
What is a Credit Score?
A credit score is a three digit number that communicates your creditworthiness to lenders and other interested parties. The higher your credit score is, the more likely it is that you’ll get approved for financial products.
Credit scores can range from 300 to 900. Below are general ranges of credit scores and what those numbers communicate.
- 600 or less → poor
- 600 to 649 → fair
- 650 to 719 → good
- 720 to 799 → very good
- 800 or higher → excellent
Other information is included in your credit report aside from the credit score number. Information available on public record, personal identification, collections, delinquent accounts, missed payments and payment history are simply a few items that are visible on your credit report.
If I Use Credit Karma, Will My Credit Be Impacted?
No, checking your own credit report does not damage your credit. When you pull your own credit report, it’s known as a “soft inquiry”. If a lender or other authorized party pulls your credit report, it’s known as a “hard inquiry”. Hard inquiries cause a minor impact to your credit score in the short run whereas soft inquiries do not impact your credit score.
Why is Credit Karma Helpful?
Credit scores are very important in the world of personal finance. If you have any financial goals, such as purchasing a car, home or home renovations, your credit score impacts your ability to achieve these goals. Without decent credit, it will be challenging to get approved for financing with affordable rates.
For this reason, many Canadians want to routinely assess their credit score and financial progress. Services like Credit Karma are helpful because they provide up to date information on credit scores free of charge. This is a powerful tool that helps individuals achieve their financial goals.
How Safe is Credit Karma?
Credit Karma will ask you for personal information when you sign up, including your social insurance number. Despite the fears that surround giving up your personal information, the service is safe. The service is truly free, the only hassle you might incur is emails trying to sell you financial products. However, some people may find the financial product recommendations helpful!
In order to keep people’s personal information safe, Credit Karma claims they use encryption services to protect the transmission of information. They also claim that they do not share personal information with third parties. While Credit Karma is doing their part, there is always a risk that your information could be hacked on the Internet. In fact, no to long ago Equifax was hacked - nothing is ever certain!
Credit Karma Competitors
In Canada, there are two other companies in addition to Credit Karma that provide people with free information about their credit: Borrowell and Mogo. Borrowell, Mogo and Credit Karma provide the same service, however, Borrowell and Mogo pull from Equifax whereas Credit Karma pulls from TransUnion.
The two credit bureaus are very similar, but your credit score can differ slightly. The credit bureaus use similar methods to calculate your score, but the final outcome could be a few points off. Keep in mind that a few credit score points shouldn’t significantly sway a lenders opinion to approve you.
How Do I Sign Up for Credit Karma?
Signing up with Credit Karma only takes a few minutes. Either visit creditkarma.ca or download their mobile app to start. Enter your basic personal information which allows Credit Karma to pull your credit report. You will be asked to verify your identity. Once that’s complete, you can access your credit information for free.
Monitoring Your Credit Score for Financial Success
Services offered by companies like Credit Karma are meant to help individuals assess their credit score on a regular basis thereby helping them achieve their financial goals. If you would like to buy a home, purchase a car or take advantage of any financial products, decent credit will be a requirement. Sign up with Credit Karma today to start working towards your financial goals!