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Credit Karma vs Annual Credit Report: Which Is Better?

By , August 11th, 2014 | 23 Comments »

credit karma versus annual credit report
With the announcement that Credit Karma now offers free credit reports in addition to free credit scores, there are a number of people wondering how it compares to the government mandated free credit report site, AnnualCreditReport. For those looking to get a free credit report, here are a few things you need to consider when choosing one or the other.

Number of Reports

The first thing to note is Credit Karma only gives users access to their TransUnion credit report. This is important because there are actually three main credit reporting agencies: TransUnion, Experian and Equifax. Each credit reporting agency is different than the others, and what is contained in each of their reports can differ from the others. That means when you see the free credit report from Credit Karma, you’re only getting access to one of the three credit reports on you out there. You can also get a free Equifax credit report at Quizzle, but again, it’s from only one of the reporting agencies. AnnualCreditReport gives you access to all three credit reports at no cost.

Frequency of Report

As a general rule, you’re only allowed to get a credit report once a year at no cost from AnnualCreditReport (there are some exceptions). Since this is a long period of time between seeing what is happening on the reports, many people request a report from one of the three credit bureaus every 4 months, giving them a better chance to catch something if it’s not right on the reports.

Credit Karma, on the other hand, gives access to the TransUnion report much more frequently. You can access it as often as once a week. This makes it much more likely to catch a discrepancy on your report quickly so you can resolve the issue right away, plus stop any identity theft before it mushrooms into a bigger problem. The caveat being that these discrepancies are showing up on the TransUnion report and not the Experian or Equifax reports.


In order to get access to your free credit report, you have to give some sensitive financial information, such as your social security number, to access it. While the past doesn’t indicate what will necessarily happen in the future, Credit Karma has been lax with user’s financial information with their mobile app which exposed the information and allowed for the possibility of it being stolen by identity thieves. Credit Karma has settled this issue with the Federal Trade Commission and is being monitored on the issue. AnnualCreditReport hasn’t had the same type of security lapse.


AnnualCreditReport does only one thing; it gives you access to your credit reports. You don’t get access to your credit score, you don’t get credit monitoring and you don’t get a lot of advertisement offers for other stuff. Credit Karma does offer more, including free credit monitoring, no-cost credit scores and tools to help you better understand how what you do affects your credit score. It also comes with a lot of advertisements for other services since this is how they make their money.  Here’s a little more insight into what closing old credit cards might do to your score. Closing a credit card account

While it would seem that since both these sites are offering free credit reports, the two would be similar in a lot of ways, but the reality is both are quite different from one another. Which ends up being better for you depends a lot on what you plan to do with the credit report. Both have advantages and disadvantages which need to be considered when deciding which is best for you.

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  • dean says:

    Why, exactly, would someone need to check their credit report on a weekly basis?

    • divebomb says:

      I don’t think there is a need to see it that often or that most people would pull it that often. But it might be nice to check it once a month just to make sure things are still as they should be. It gives an option which is what I think matters.

  • faith says:

    I don’t understand why you keep writing about this. Dave Ramsey says that these are tools to keep you in debt. You shouldn’t want a credit score or care what’s on your credit report because it’s better to pay everything in cash. Only fools care about things like this.

    • Dan says:

      Better to pay in cash? Yes. Practical for most/everyone? Nope.

      I envy you if you can pay for a home or car with cash. My family cannot. We don’t live lavishly nor have addictions sucking up our income, however we also don’t have $100k in savings.

      Yes it is a game we poor play that makes others rich(er), but it is also the only way to claw your way above your caste in some cases.

      • faith says:

        If you don’t pay in cash, you’ll live a life of debt. The choice is yours.

      • Bonnie Ball says:

        Just replying to your comment. Since my income is just barely over 800.00 a month i pay my bills only in cash. I do have a checking account but i have no credit cards either. I pay rent every month and a cable bill and a few other bills all in cash. I learned the hard way when it came to credit cards and i refuse to own one now. My life is pretty simple and alot less stressed out since i no longer get credit card bills in the mail.

    • scott says:

      Stop drinking the Kool-Aid and start thinking for yourself. These do matter. Not caring about your credit report may mean an identity thief goes undetected ruining your credit by taking out credit cards and loans in your name.

    • Davis says:

      Poor Faith,
      Never rented a car? No credit card- no car..
      Same with other things that are rented like tools or party tents..
      If you live a life here in the US cash is dead and the CC is (visa) 100% protection against fraud and misrepresentation.
      If you don’t get a credit report you will not know if your information is correct or if someone else is scamming you.
      Cash is equivalent to victim the way you use it.

      • Amelia says:

        Actually, Davis, you can rent a car without credit, you just have to use debit and they withhold a larger amount until you return the car. I’ve been living on cash-only for years and haven’t had a problem. Fairly certain I’ve also been able to save myself, at the very least, hundreds in interest.

        • scott says:

          True, but you also end up paying more to rent the car. Most credit cards will allow you to waive the insurance fees because the card provides that insurance. If you pay for the car with a debit card, you have to pay those fees yourself or risk having to pay for any damages to the car if there is an accident.

          • Sam says:


            I should clarify if you already have car insurance, you do not have to pay fees for the extra insurance the rent-a-car company offers, even if you pay with a debit card.

      • faith says:

        You can get all those with debit cards.

        It doesn’t matter if someone steals your credit if you never use it. It only matters if you need to use it and are part of the system. And if you have zero credit, then nobody wants to steal it so one less thing to worry about. Read Dave Ramsey and become enlightened.

        • Sprite says:

          Faith, you’re a dumbass. Seriously.

          • faith says:

            People resort to calling names when they can’t argue a point on the merits.

          • Sandra says:

            I haven’t figured out yet whose side of this discussion I’m on, but I will agree with Faith on this point. Ad hominem argumentation really is used by people who can’t argue on the merits of something. A certain political party does that all the time . . . .

        • Trask says:

          Actually Faith. It does matter if someone seals your credit. I had zero credit well into my thirties because my parents taught me never to buy more that I can afford. I took that to heart and also thought that it meant never getting credit cards. However that also meant that when I went to move into my own place without a roommate. that all of the rental agencies that may have approved me couldn’t find a credit report and thus declined me. I was informed by one of them that when they ran a check on me that two of the major agencies said that I did not exist. The third company said that they were reasonably sure I was a real person but there wasn’t enough information to give me a score.
          It currently means that unless I have significant savings that I will not own a house or even a new car, (or even one slightly used)
          It means that I close myself off to possibilities and privileges in life.
          I have recently started working on building a credit score. I still only buy what I can afford. I have no debt and am slowly working to build credit. I use cards that give me cash back and I use them for things that I would have to pay for anyway. So It isn’t costing me any more than it would if I were using cash.
          Also, you are incorrect about only people with scores being prone to Identify theft. When I started working on my credit I found out That someone had tried to use my identity a year before to set up credit 4 credit cards in my name. They failed. (I assume because I did not have enough history to have a score) But they still tried and it took me a while to clear things up and have an investigation performed so that I could clear things up and set precautions in place to make is unlikely for that to happen again

  • Mike says:

    It’s better to pay in cash if you have a weakness to overspend when using credit. For those that don’t spend more than they have, credit cards are a great way to rack up rewards/cash back on expenses you would normally incur anyways, as long as you pay in full every month.
    I know a few people that have never paid a penny in interest, and earn a few hundred dollars a year in cash back, or enough airline mileage for a free flight.

  • Alex says:

    The smart person does what Ramsey really does. They leave debt free AND use credit. I am certain Ramsey has and 700+ FICO score.

    When he acknowledges that having a 15 year mortgage is the only way to have acceptable debt (even when it has to be paid off as fast as possible in his system), he also acknowledges the machinery of the debt system and that sometimes it is acceptable to use it.

    Ramsey is basicly trying to show people that cannot manage their money and debt a way to act responsibly. There are many Ramsey zealots out there, non-zealots take his advice and use it to improve and manage their lives using all means available. Debt used responsibly can change and improve the quality of life as much has Ramsey’s System.

  • Jay says:

    Most times, if you pay cash you’re overpaying. All my rewards cards give me at least 1% cash back, and stores usually price that into their retail prices. Also, I have one card that pays me $120 into my checking account each year ($30 per quarter). I use all my cards to pay things I would have paid anyway and pay the balance in full each month, strengthening my credit history and getting paid to take care of my expenses. I learned my credit lesson the hard way but now I’m totally reformed and haven’t paid a penny in interest in two years.

    And I love that Credit Karma is providing free TransUnion reports! Now I just have to check the other two bureaus twice a year (Georgians get two reports free from each bureau).

    • danny says:

      To be fair, this only works if you pay off the credit card in full each month. Most people who have bad credit don’t have the discipline to do that. While it may technically be a bit more if you pay in cash, they save a ton of money in not having any interest charges.

  • william says:

    After Credit Karma exposed financial information that could have been easily stolen on their phone app after assuring they were using the most advanced security, I would trust that company as far as I could throw a mountain. I don’t give companies second chances when it comes to securing my financial information. If they can’t do it right the first time, I’d never trust them to do it again.


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