Discover credit card

Credit Karma Alternatives for a Free Credit Score

June 2, 2014 By Jeffrey Strain 2 Comments

There was a time when the only way you could get a free credit score was to hand over your credit card. You would usually have to sign-up for a credit monitoring service as part of the deal which wouldn’t initially cost anything for the first month, but if you forgot to cancel the membership, your credit card would be charged. While there are still companies out there offering credit scores in this manner, it’s no longer essential for you to have to give a credit card in order to obtain a credit score.

Probably the most popular option to get a free credit score which doesn’t require a credit card is from Credit Karma. They offer a number of different FAKO credit scores (FAKO scores are often called “educational scores,” and they’re not an official FICO score which lenders use). The scores they offer include the Auto Insurance Score, TransRisk New Account Score, and VantageScore all through the TransUnion credit reporting agency.

While they’re the most popular choice, they aren’t the only choice available to you. There are a number of other websites and companies which offer a free credit score without you having to give a credit card. Below you’ll find a few legitimate alternatives to Credit Karma where you can also get a credit score at no-cost.

Credit Sesame

Credit Sesame works much the same way as Credit Karma, but they deliver a different FAKO credit score to their users. Credit Sesame uses Experian’s National Equivalency Score. They also offer free identity theft protection insurance which differentiates them from other competitors, most of which only offer the no-cost credit score and credit monitoring. (their site)

Quizzle

Quizzle is another service whitch offers a no-cost FAKO score to its users, but it delivers a different credit score service than both Credit Karma and Credit Sesame. Quizzle uses Equifax’s VantageScore. (their site)

Credit.com

Credit.com is another website which offers a free FAKO credit score to their users. Their score, like that of Credit Sesame, is from the credit reporting agency Experian, but they use their VantageScore. (their site)

WisePiggy

WisePiggy is a new website offering scores without the need of a credit card. They remain much smaller than the others mentioned above. They provide the TransUnion VantageScore FAKO score to their members. (their site)

Discover Credit Card

Discover credit card holders now receive their FICO credit score (the TransUnion 08 Bankcard Enhanced version which is the one a credit card company would see) with each of their credit card statements at no charge. There is a debate as to whether or not a FICO score is better than a FAKO score since there are nearly 50 different FICO score versions, but Discover credit cards do offer a true FICO score while the other services don’t.

It’s important to note that in order to get any of these free scores, you will have to give the company your social security number and other sensitive financial information. There is always a risk that these companies don’t keep the information secure.

Credit Karma vs Discover FICO Score Review: Which is Better?

May 19, 2014 By Jeffrey Strain 3 Comments

Which is better Credit Karma or Discover FICO credit score

Now that Discover cards are offering free credit scores to all their card holders as part of their monthly statement, more people are wondering whether the score from Credit Karma or Discover is better? This isn’t an easy question to answer because there are differences that come with both services. Which company offers a better credit score depends a lot on what you want to do with your score.

If you already have a Discover credit card, there’s nothing that you have to do to get your score. It automatically comes as part of your statement each month. This now applies to all Discover credit cards. If you don’t have one of their cards, you need to decide whether signing up for another credit card is worth getting a free credit score on a monthly basis. For Credit Karma you must sign up on their website. The question becomes whether or not you’re willing to give sensitive financial information to a third-party website on the Internet. Both companies will require similar information upon sign-up.

Security

It really is a toss up as to which of the two is more secure. Each time you use your credit card, there is a chance that your information might be stolen. The whole Target data breach is a good example.

Credit Karma would seem to be more secure since you aren’t using it in multiple places like you do a credit card, but it’s had some security issues of its own. It recently had to settle with the Federal Trade Commission (FTC) due to lax security on its mobile app. The security issue had the potential to reveal all kinds of sensitive financial information, including social security numbers.

Which is More Accurate?

Credit Karma gives a FAKO score which is a derivative number, and not a true FICO score. Discover gives you your FICO 08 Bankcard Enhanced version based on the TransUnion report. This report is close to what a creditor would pull for a credit card application, so Discover should be closer to that type of credit pull. The problem is that there are close to 50 different types of FICO scores that are weighted slightly differently depending on who is asking for them. For example, there’s versions such as a auto enhanced FICO score and a mortgage enhanced FICO score. So while the Discover score should be close to the credit card score, it might be off to some degree to the other weighted scores.

Credit Karma has a similar problem, but it’s not clear if it’s close to any of the different true FICO scores, since it is isn’t drawn directly from them. It would seem that that Discover card score would be more accurate (and if I was going to make a guess which would be closer to what a lender was pulling, I would go with Discover), but there could be instances when the Credit Karma score was closer depending on which FICO score the creditor was pulling.

Tools

Credit Karma comes with a lot more tools that you can use to lay out a plan to improve your credit score and finances. With Discover, you get your score each month and that’s about it. Credit Karma provides tools that can help you figure out ways to reduce debt and get your finances in better order so that you can raise your score.

If you are following your credit score and trying to actively improve it, Credit Karma offers some tools and safeguards such as credit monitoring, that Discover doesn’t. If, on the other hand, you are more passively keeping an eye on your credit score and simply want to confirm that nothing out of the ordinary has happened to your score each month, Discover offers a good option.

Will Discover Make Credit Karma Obsolete?

April 7, 2014 By Jeffrey Strain 4 Comments

credit karma vs discover free credit score

There is once again a change taking place in the world of free credit scores. When Credit Karma first appeared, it was the one bringing a change in this same business. Their entry altered the way many people obtained their credit scores. The company came on the scene to offer free credit scores with no credit card needed, uprooting the leading free credit score companies at the time, which required a credit card as part of a free initial trial to a credit monitoring service. The way that they made their money was to charge the credit card if the customer did not cancel the trial before the free period ended. The new “no credit card” needed model was a hit, and made Credit Karma the leading free credit score website on the Internet. It even managed to produce copycats such as Credit Sesame and Quizzle.

It appears that another major shake-up is occurring within the free credit score universe, but this time it might be Credit Karma that finds itself being made obsolete. Credit cards, most notably Discover credit cards (the Barclaycard US and First Bankcard also give this service), have started to give their customers their credit score for free as part of their monthly billing statement.

The move is a huge disruption to the Credit Karma business model, and it only seems that it will get worse. Discover began giving out the credit score at no costs to the users of its Discover It credit cards in November of 2013, but the trial was such a success that they have decided to expand the service to all of its credit cards.

This could be just the tip of the iceberg. According to an article in Bloomberg, FICO is in the midst of “…negotiating with some of the largest credit-card issuers” about including credit scores with their statements. If it comes about that anyone who has a credit card is automatically getting their credit score for free as part of their statement, what need is there for consumers to seek out Credit Karma and other business models like it?

Another issue is what if banks begin giving out credit scores as part of having an account? While this hasn’t happened yet, there is a push from some consumer advocates for financial institutions to offer this service so that consumers have a better understanding of their credit score and how these scores work.

The question becomes, if more credit cards join Discover, or if banks begin to offer credit scores as part of opening an account, can a service like Credit Karma survive? Or will it become obsolete in the same way they made companies that offered credit scores, but required a credit card to do so, obsolete? If this becomes a trend, it will cause a number of issues that Credit Karma must overcome to remain relevant.

The Good News

Credit Karma has some friends to help them out as they try to find a way to stay relevant as it becomes easier for consumers to get their credit score as part of their normal banking. They were recently able to raise $85 million in new financing from Google Capital, Tiger Global Management and existing investors. These investors have confidence that the company can overcome the added competition heading toward them, or they wouldn’t have been willing to invest so much into the company.

Credit card statements only come out once a month, and Credit Karma offers their free score once a week. For those who want to see their score on a more regular basis, there is still a reason for the to seek then out.

The Challenging News

Credit Karma recently had to settle with the Federal Trade Commission (FTC) for failure to secure their mobile app. Not doing so made the app vulnerable and possible for hackers to obtain birth dates, credit card details, credit report details (including account names and balances), credit scores, customer names, email addresses, home addresses, passwords, phone numbers, and Social Security numbers. One of the main reasons security experts warn not to give sensitive financial information to third-party websites is that breaches like this can occur, and the above settlement should make anyone giving sensitive information to Credit Karma more than a little nervous.

Customers to this point have been willing to seek out Credit Karma if they wanted to find out their credit score because there really wasn’t an easier way to get it at no cost. This is no longer the case with credit card companies offering the score as part of the customer’s monthly statement. How will they compete against offers that are more convenient to obtain than their own service?

The ground is definitely beginning to shake in the world of free credit scores, and it should be interesting to see who will survive as a new phase of being able to obtain these scores becomes easier and easier, and from a wider variety of financial institutions.

(Photo courtesy of Karen Highland)