Is the Credit Karma Free Credit Report a Scam?

Credit Karma recently made the announcement they would offer their users free credit reports on top of the free credit scores they already give. The question many people have when they hear about something like the free credit report is, “What’s the catch?” and, “Is it a scam?” The good news is the offer isn’t a scam, and for the most part, there aren’t any catches involved with getting it.

Is the free credit report really free?

Many companies that offer “free” credit reports technically come with no cost, but there’s a catch. In order to see the report, you have to give your credit card and sign up for a free month of credit monitoring with the company. If you cancel the credit monitoring before the month free trial is up, then you don’t get charged for anything. If you accidentally forget, your credit card ends up being charged. The FCC also reports that canceling can difficult, and it is not always done the first time you request it to be removed. So while the report is technically free, there’s a catch that can cost you money down the line.

Credit Karma set up their no-cost credit report offer the way they did with their no-cost credit score. There is no need to give your credit card to be able to see the report. They are able to do this because of the way they make money. Other sites make their money by selling the credit monitoring services, but Credit Karma makes its money through offering services where they get a commission if you sign up. These credit scores and credit reports don’t come cheap, as the company spends tens of millions of dollars to get them, but they make enough on the advertising to their users to more than make up for these costs.

Is it a real credit report?

There are some who take issue with the free credit scores from sites like Credit Karma, Credit Sesame and Quizzle. They question the efficacy because they aren’t FICO scores. There’s a debate as to whether this really matters or not, but it’s a concern to some people. They want to know if the credit report is from the credit reporting agencies, or if it’s some type of other credit score. Good news: The reports are legitimate.

In this instance, the credit reports given are from TransUnion and Equifax, and it’s the credit report you would get if you bought it directly from them. While it is a real report, it’s only one of the three main credit reports available. You do not have access to your Experian credit report from the site, although you can get your Experian report directly from them free of charge. You can also get your credit report for all three agencies at no cost once a year (plus in some other specific circumstances) from AnnualCreditReport.com (you can see how the Credit Karma and AnnualCreditReport offers compare here).

How Does This Help?

When you are looking for financing (or anything else regarding your credit), it is nice to have a leg up. Now, not all lenders disclose which reporting agency they check. Additionally, if you need a mortgage, they often take all three and average them. So, having the info helps you stay on track, but you will never know exactly what the bank sees until they show you personally.

How often can I see my credit report?

Many people wonder if the credit report is a one-shot deal. That is, once you’ve seen it one time, then you can no longer see it again to see if it has changed in the future. The answer it no. In fact, you can access your updated report as frequently as once every week if you desire. Although, many creditors only update the reporting agencies about once every month.

Conclusions

The Credit Karma free credit report is not a scam, or a bait and switch program. The only catch is that in order to get it, you will be given a lot of advertising offers which you can choose to accept or decline. You won’t have to give your credit card to access the report, but you do have to give them sensitive financial information. It comes with some risks, but nothing out of the ordinary for a credit reporting site.

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