This article may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services. Nonetheless, our opinions are our own.
What is Credit Karma?
Credit Karma is a credit score and report tracking company that offers many services for free. Credit tracking is widely used in developed countries for many things, such as loans, credit card applications, apartment rentals and even hiring. Many people are not aware of credit scores and such things before it is too late. For example, maxing out that first credit card, defaulting on a first car loan payment or even being late on the rent while in college can all have an effect on a persons credit score. These are not things people are taught in school, or even in most cases by parents. Credit Karma is aware of this and they work hard to keep people informed of their financial lives.
How does Credit Karma make money?
Credit Karma uses a few avenues to make money. The first way they make money is to make credit card offers to people with matching scores. When a customer is approved for a card, they get a small commission for driving the customer to the card. They also use algorithm driven targeted advertising and lead generation for companies in addition to credit card offers. The trick, of course, is having enough users to make the model profitable.
Recent developments
Credit Karma recently added a tax preparation and filing service. Once again, these services are free to users even if you are self-employed. The advantages to the consumer here are: there is no up-selling to the next best tax-return analysis, there are no hidden fees and there are no charges for state filings. The software is said to work much like the other big accounting houses. The only downside is that there are no experts at your fingertips to ask for advice. The fact that it is completely free makes up for that.
Fun fact
Kenneth Lin is the founder of Credit Karma, he also founded Upromise, which is a savings account of sorts where one can contribute to a child’s future education needs. As many tech startups, Credit Karma is no different and was created to solve a problem. Lin became discouraged at the cost of getting credit reporting and scores. So he created the company to take care of this problem for himself and many millions of other people.
Reviewed and edited by Albert Fang.
See a typo or want to suggest an edit/revision to the content? Use the comment form below for feedback.
At FangWallet, we value editorial integrity and open collaboration in curating quality content for readers to enjoy. Much appreciated for the assist.
Did you like our article and find it insightful? We encourage sharing the article link with family and friends to benefit as well - better yet, sharing on social media. Thank you for the support! 🍉
Article Title: How Does Credit Karma Make Money?
https://fangwallet.com/2018/07/21/how-does-credit-karma-make-money/The FangWallet Promise
FangWallet is an editorially independent resource - founded on breaking down challenging financial concepts for anyone to understand since 2014. While we adhere to editorial integrity, note that this post may contain references to products from our partners.
The FangWallet promise is always to have your best interest in mind and be transparent and honest about the financial picture.
Become an Insider
Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned. The opinions expressed here are the author's alone.
The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur including the potential loss of principal.
