Experian is a for-profit credit reporting agency that has been in business for over 100 years. Credit Karma is a personal finance website that provides free credit scores and credit monitoring. Both are useful for consumers looking to get a sense of their overall credit health, but there are some key differences between the two.
There are two main credit reporting agencies — Experian and TransUnion — and then there’s Credit Karma. Experian and TransUnion are for-profit companies that collect and sell your credit information to creditors in order to provide them with a way to make a credit decision. These companies are not consumer-facing and don’t provide the same services as Credit Karma, which is a consumer-facing company that gives you access to your credit score and reports for free.
With so many credit monitoring services to choose from, it can be hard to know which one is right for you. With that in mind, we’ve created this comparison guide to highlight the differences between these two popular services. Credit Karma, a subsidiary of the consumer reporting agency TransUnion, is a personal finance website that offers free credit scores, credit reports and credit monitoring. It also offers more detailed credit analysis, which you can purchase for a small fee.
If the source of your credit score is a mystery to you, don’t worry. You are not alone! Many people don’t know where their credit score comes from if they have more than one and what it means. Services like Credit Karma are known for their instant credit scores, and credit bureaus like Experian are constantly in the news. So who makes the decision on your evaluation? We dive into the Experian vs Credit Karma question and talk about where your score comes from. Read on!
What is a credit check?
It doesn’t matter if you don’t know what a credit history is. We’ve already talked about improving your credit history as part of the budget plan, but now we’re going to talk about exactly what your credit history is.
Your financial card
Your credit rating is a number that indicates your ability to repay your debts. Think of it as the financial evaluation you get for your behavior as a consumer. If you have a high credit score, it means that you are paying off your credit card payments and other debts well. A low score means you’ve been late or underpaying on your loans.
How an outcome is determined
There are three private companies that determine your credit score. They are Experian, Equifax and Transunion. They are not governmental or non-profit organizations. You work in banking and credit. When you take out a loan, whether it’s a student loan or a credit card, the person or company opening the loan passes the information on to these three agencies. These agencies track every payment you make. They also track other factors, such as how many lines of credit you have open, how often you open or close lines of credit, whether any of your accounts are in collections, and how often you check your credit. Pixabay image If you pay regularly and don’t open and close accounts too often, your score will be high. Each agency uses slightly different criteria to determine your credit score. This means that it can be higher at Transunion than at Experian, or vice versa. Don’t worry about it. If you pay your bills on time, your score will generally be high. Credits range from 300 to 850.
What a credit score means to you
A good credit history is the first step in opening a new line of credit. But how do you make it beautiful? If your score is within a certain range, you are a good candidate for a new credit card or loan. You can see what these areas look like here:
- Exceptional merit: 800+
- Very good credit: 740-799
- Good credit: 670-739
- Fair credit: 580-669
- Very bad credit: 300-579
The largest percentage of people might fall into this second category. If you are, you can count on low rates, a high line of credit and good terms. However, if you have a very low credit score, you will have difficulty obtaining consumer loans and credit. As a result, it may also become difficult for you to go to school if you need loans and to buy a car if you need money. Now is the time to improve your credit history and perhaps reconsider your relationship with your credit card. And that’s not all! Your credit history can affect many things, such as getting a job or an apartment. That’s why it’s important to plan your financial decisions carefully and review your credit history before making any major changes in your life. That’s where Credit Karma comes to the rescue. Pixabay image
Difference between Credit Karma and Experian
We mentioned Experian above as one of the three major credit bureaus. You may have noticed that we did not mention Credit Karma. That’s because it plays a very different role in your credit life. Credit Karma is not a credit reporting agency at all. It’s more like a credit check. It is also about credit, but in a different way and for a different purpose.
Creditworthiness check based on credit reports
Credit Karma is a credit monitoring company. This means we can check your credit score without you having to ask for it yourself or requesting a full report each month, which can negatively impact your score. This is very useful when you are trying to rebuild your credit. There are other ways to check your account. Additionally, some credit cards, like most Capital One credit cards, even offer a free credit score through their online interface. Credit Karma obtains your score from the credit bureaus Transunion and Equifax. He then submits this assessment to you. However, Credit Karma does not determine your credit score like the credit bureaus do. The agencies actively monitor every credit card and loan payment you make, whether you know it or not. Credit Karma is an optional free service accessible through a free mobile application. It is supported by advertising and aims to give consumers power over their financial lives. Credit bureaus, on the other hand, are there to serve the credit and banking industries.
Consequences of ordering too many credit reports
It’s easy enough to check your credit score with Credit Karma, or even Mint or any credit card score monitoring service. There are no consequences for you to track your account in this way. However, your score is only part of your credit life. If you are a victim of identity theft or are actively trying to improve your credit score, you may need a full credit report. It shows all your open and closed accounts, as well as your payment history for the month. You are entitled to one free credit report from each of the three credit bureaus per year. If you have more than one, however, it will cost you money. Multiple credit report requests can affect your score. This includes the reports that lenders request when you try to open a new line of credit or account. Keep this in mind! You can easily check your account without any consequences. It’s not easy to get a full report. Pixabay image
How they work
Credit Karma and Experian have different missions. Credit check is just as important as credit, and you don’t want to get a credit card statement to check your account. Here’s how they make money and help you make responsible credit decisions.
Opening a Credit Karma account is free. The same applies to the application. Given the amount of money that goes into the loan and credit industry, this may come as a surprise to you, but make no mistake! Credit Karma makes a lot of money by placing ads with its free users. Although disclosure of information about advertisers is mandatory on the site, which prevents Credit Karma from misleading scammers and unscrupulous creditors, caution is advised when using this service. She makes her money by recommending loans to people through ads. The same goes for the credit card offers you see here. Credit card companies love to advertise on Credit Karma because it allows them to target people with good credit and get them to open credit accounts they may not have originally intended to open. As mentioned earlier, Credit Karma is a credit simulator that uses your Equifax credit score and your Transunion credit score to give you an idea of your credit status. Remember that each of the three credit bureaus interprets your credit history slightly differently; your Transunion score will always be slightly different than Experian’s. Your Credit Karma score is the average of your Transunion and Equifax scores. Credit Karma is for personal finance only. Information about the company’s credit score is not available on Credit Karma. A trade credit score tells banks how well a company repays its loans. If you want to start your own business, be careful not to mix up your personal and business finances! This is called mixing ofand. Fit Small Business magazine has a great article on how not to do it. image from Pixabay
If you want to access Experian’s information about your credit profile, you can do so by entering your social security number on their website and creating an online account. Remember, Experian already stores information about you, even if you’ve never opened a line of credit. If you have an account, you can order reports, freeze credit, and fight identity theft. Experian makes money by charging for its reporting services, and in most cases lenders pay. When you apply for credit, the bank requests a full credit report from each of the three credit bureaus, including Experian, before approving you. You are not obliged to provide them with this information. They will ask Experian, Equifax and Transunion themselves. They usually look for arrears, which each of these bureaus lists in their credit reports. But you’ll also want to know how many lines of credit you’ve recently opened and what percentage of your credit you use each month. Although each rating agency calculates your score slightly differently, they all receive and report the same information about you. You will never be in a situation where your Transunion score is 350 and your Equifax score is 795. All lines of credit must be reported to these agencies.
How to use
So now we know what a credit score is and the difference between a credit checker and a credit bureau. We know how Credit Karma differs from Experian, but how can this information help us? In fact, it is very important for your financial health! Read on to find out how you can use these two agencies to protect yourself from fraud and improve your financial life. Pixabay Image
Identity theft prevention
Credit Karma does not prevent abusers from opening accounts in your name, but it does alert you by phone and email when a new account appears on your credit report. If you don’t recognize this account as the one you opened, it’s time to start calling! It is important to note that Credit Karma is only a monitoring agency. You cannot prevent criminals from stealing your identity or take action after identity theft. But if knowledge is half the battle, Credit Karma is a great service to have on your side. If you find out that an account has been illegally opened in your name, you can call the lender and inform them of the fraud. You should also call the credit reporting agency and let them know that a theft has occurred. They can help you freeze your credit and repair damage to your credit score. (We’ll talk more about the credit freeze in the Experian section!)
Know your current score
Credit Karma provides the average score of the two credit bureaus. Think of it as an auto-rating, a monthly update of your status. This can be very useful! If you decide to open a new line of credit, simply go to the Credit Karma mobile app. Finding a home, a job, and life in general becomes less uncertain if you already know your credit rating. While the Credit Karma score is not accurate, it is a good way to see how you are doing overall.
Identity theft prevention
In 2017, Equifax was hit by a massive data breach in which hackers got their hands on tons of social security numbers. It is estimated that half of all US citizens have had their social security numbers compromised. If the criminal has this vital information, he can open a bank account in your name, get a credit card, accumulate debt and claim government benefits. One way to avoid this is to freeze your credit with the three credit bureaus. Image from Pixabay If you freeze your credit history, no bank, car company, credit card company or real estate lender can see your credit report. You will still be able to access your account through Credit Karma and other versions of credit monitoring, but no one in the world will be able to get your report. This means that if someone contacts the credit card company with your social security number and information, the company cannot open an account for that person. Your credit money is protected by a unique and secret PIN code known only to you. The offender will not be able to open an account. Freezing your credit is now free. (Freezing used to cost $5). Everyone should have their credit frozen, and we strongly encourage you to do so now. It’s quick and easy, but make sure you keep your PIN in a safe place! This is the only way for future creditors to know that you are not using your social security number fraudulently yourself.
If your road to credit has been bumpy, you’re in good company. Many people get into trouble, from cardholders who are more interested in accumulating points than paying off balances, to students who graduate, get a job, start an exciting new life and completely forget to make their monthly payments. This happens to a lot of people, and it doesn’t mean you’re a bad person, a bad borrower, or a bad candidate for new credit accounts. At Experian, you can check your credit report and see what accounts you already have. You’d be surprised how many consumer credit cards and loyalty cards mess up your credit history! Your report is an overview of your credit and the first step in solving your credit problems. Not only does it remind you of long-forgotten credit lines, but it can also alert you to scammers who have been pouring into your account. Since your report includes details about each line of credit, you will know who to call to close these illegal lines of credit. Image from Pixabay
Experian and Credit Karma: Strengthening ourselves
Both companies are important parts of the same financial ecosystem. If you’re smart, you at least have a relationship with Experian and two other credit bureaus. Since Credit Karma is free and convenient, it is a good idea to create an account with this service as well. (If you don’t like Credit Karma, Intuit’s Mint personal finance app is also a good choice. Also check your credit card account, as it may also offer free credit monitoring). The difference between Experian and Credit Karma is the difference between just having a credit score or knowing how your credit score changes each month. Many people who are aware of their credit history don’t worry about it because they think it will work itself out. Don’t be one of those people! Your financial life will be happier and healthier if you take control of and are aware of this crucial facet of modern life. Experian and Credit Karma are both credit monitoring services that you can use to check your credit score. However, there are a number of differences between the two services, including how much they cost, what they offer, and which credit scores they report. Credit Karma, founded by a couple of former Citigroup employees, has a free credit monitoring service that provides you with your credit score (VantageScore) and an estimate of how much debt you can take on. Credit Karma is marketing itself as the alternative to the “Big 3” credit reporting agencies (Equifax, Experian, and TransUnion).. Read more about fico score vs credit score and let us know what you think.
Frequently Asked Questions
Is Credit Karma or Experian more accurate?
Experian and Credit Karma are both reputable credit monitoring companies that offer free services to their customers. While this seems like a no-brainer, the fact is that you really get what you pay for with a free service. The main difference between the two is that Experian offers a free credit report, but you have to pay for your credit score, while Credit Karma provides both for free. Which credit reporting agency is more accurate? Here at TheFundingSports, we have over 3,000 readers who have shared their opinions about the two top credit reporting agencies: Experian and Credit Karma. Many of these readers have actually gotten their credit reports from both companies and noticed different amounts and different late payments. What’s the deal? Are these two credit reporting agencies really that different?
Why is my credit score different on Credit Karma and Experian?
There are many kinds of credit scores, but the most important are FICO® Scores and VantageScores. These scores are created by two of the three major credit bureaus: Experian and TransUnion. The third major credit bureau, Equifax, also gives custom scores to its consumers. Before we look at the differences between these scores, let’s take a look at what they have in common. FICO® Scores and VantageScores are both based on similar information. They look at your credit history, the amount of debt you have and the number of accounts you have open. In the old days, the only place you could get your credit score was from the three major credit reporting companies (Experian, Equifax, and TransUnion). These companies used centralized credit reporting systems to gather financial data about you and your activities. Today, you can get your credit scores for free at all three major credit reporting agencies—but is one better than the others?
Why is my Experian score lower than credit karma?
The reason your Experian score is lower than your “credit karma” score is because the credit karma score is based on TransUnion, the other credit reporting agency. Experian compiles data from other credit bureaus, such as Equifax, in addition to their own. So you used your favorite credit score service, and it told you that you were a good credit risk. But then you checked your credit score, and you found that it was drastically lower than the score you saw on your favorite credit score web site. What gives? Is there a reason why you can’t trust your credit score? And if so, how can you fix it? It turns out, the answer to this question is a bit more complicated than you might expect.
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