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Did Credit Karma Just Fundamentally Change the Free Credit Score Industry?

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Credit Karma just changed the free report industry
Credit Karma recently announced it was now offering all its customers two free credit reports, an expansion from the one it had previously been offering. Most of those following Credit Karma and the free credit score and report industry looked at this move as nothing more than a convenient expansion of what the company had already been doing. What many have failed to see is this latest move may have fundamentally changed the free credit score and free credit report industry.

What is such a big deal about one company offering two credit reports instead of just one? Up until the announcement, all the major players in the industry were tied exclusively to one of the three credit bureaus. Credit Karma receives its free credit score and credit report information from Transunion. Credit Sesame receives its information exclusively from Experian. Quizzle received its information from Equifax. Credit.com aligns with Experian. Lending Tree gets its information from Transunion. Mint sources its information from Equifax. All the sites giving out free credit scores and free credit reports have, up to this point, only used a single credit reporting bureau.

That’s no longer the case. By offering a second credit report, Credit Karma instantly broke down the exclusive free score and report arrangement that has held between these sites and the credit bureaus for years. Doing so could be a much bigger deal than it first appears. The reason is the information each credit bureau keeps on each customer isn’t necessarily the same. If a consumer wanted to know a credit score or what was on a credit report more than once a year (everyone can receive a free credit report from each of the credit bureaus once a year at AnnualCreditReport), they had to sign up with multiple websites. One to find out their information from Transunion, another to find out their information from Experian, and yet another one to find out their information from Equifax. By becoming the first site to offer credit reports from multiple credit reporting agencies, Credit Karma has lined itself up to be the one-stop shop for this information.

Think about it. If you were a member of Credit Karma for your Transunion information and a member of Quizzle or Mint for your Equifax credit score and report information, with this new announcement, why would you need to keep your Mint or Quizzle account? You can now get both from Credit Karma, which gives consumers a reason to stay if a consumer ever decides he needs to choose between competing sites.

Credit Karma Now Offers Two Free Credit Reports

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Credit Karma announces free Equifax credit report
Credit Karma has been on a spree of offering new financial tools for its members at no cost. The company, which is best known for allowing consumers to get their credit score for free without also having to hand over a credit card, introduced a free credit report from TransUnion in 2014. They have now expanded to offer their members access to another credit report at no cost through Equifax.

Free credit report sites like Credit Karma have been feeling competition from a number of fronts over the last couple of years. Some credit cards began to offer free credit scores to their members with their monthly statements, and the free credit score sites needed to find a way to differentiate themselves. Credit Sesame did this by offering free identity theft protection, while Credit Karma went the free credit report route. Last year they introduced a free credit report from Transunion to all their members.

This past week they announced that in addition to the Transunion credit report, they would also be offering members their Equifax credit report at no cost. Does it really matter having access to two credit reports rather than one? It could, especially since the different credit agencies’ credit reports aren’t identical.

An extra credit report will give users another tool to keep track of their credit. It can also help them spot inaccuracies which may have made their way into only on report or the other, and there are still a lot of errors in those reports. According to the Federal Trade Commission (FTC), 25% of consumers have found innaccuracies on their credit reports which had the portential to negatively impact their credit score.

Another benefit of the two reports is the potential of spotting identity theft in a more timely manner. Signs of identity theft taking place may not show up on every agency’s credit report, so having access to two is better than just one. If a report shows activity the account owner didn’t initiate, the chance of stopping the identity theft early on when not as much damage has happened is good.

How is Credit Karma giving access to two credit reports better than the everyone having access to all three credit agency reports (Credit Karma doesn’t provide a credit report for Experian) as mandated by the Fair Access to Credit Scores Act? While everyone can get a copy of each of their credit reports from AnnualCreditReport.com, they can only get access to the reports once a year. Credit karma will be giving its users access to the reports as often as once a week, which can mean they catch fraud much earlier than they would checking only once a year.