In March, Google Capital gave Credit Karma $85 million to roll out some new products. Now we’re seeing the fruits of its labor.
This morning Credit Karma will start offering full free credit reports (not just scores) every week to its members.
The company is an alternative to credit monitoring services like Freecreditreport.com, myscore.com, and freecreditscore.com. These services offer consumers free credit reports but automatically sign customers up for monthly credit monitoring services unless they cancel the service within a specified grace period.
Then another service came along called Mint. That free service allows you to link all your bank information to one main monitoring service, so you can see detailed graphs of how you spend your money. Mint also gives consumers access to the three free annual credit reports they’re entitled to by federal law. Mint makes money by heavily advertising banking products and services to its members.
Credit Karma works similarly to Mint, except it’s entirely focused on your credit. The company makes money by advertising bank services to consumers based on their credit information. In fact, the frequent ads are the only real complaint against the service, notes G.E. Miller on 20somethingfinance. But, of course, no product is truly free.
In addition to the weekly full credit report, Credit Karma provides some analytics. “We want to point out to consumers what really matters,” says chief executive Ken Lin — like when you spend over a third of your credit limit on your American Express, which makes you look risky to creditors.
Regularly reviewing your credit report is more important that you might think. One in four consumers saw errors on their credit reports that could have affected their scores, according to a study by the Federal Trade Commission. Your credit score affects your ability to make major purchases, like a car or a home, and in certain circumstances can affect your ability to get a job.
Credit Karma pays tens of millions of dollars for credit reports every year, says Lin, but advertising pays.
For consumers the question will be how often they actually want to look at their credit report and whether they prefer to pay a premium for a credit monitoring services rather than be bombarded with ads.
At the very least, we know where Google is placing its bets.
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