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Is Credit Karma a Useful Financial Service When Buying a Home 

 January 6, 2021

What is Credit Karma

Are you wondering what Credit Karma is and what it does for you? When you are buying a house, it is important to know your credit score. If your credit score needs a bit of help, some companies can help you do that. One of the best credit improvement companies out there is Credit Karma.

Credit Karma gives you advice on what you can do to boost your credit scores. They also provide you with your scores so you can track your progress.

Credit Karma is a personal finance monitoring system allowing consumers to monitor their own credit scores. The company makes money from advertising sales, so this is a ‘win-win’ as consumers get this service free of charge.

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Credit Karma also educates consumers about the impact of their credit scores, and this is something many people don’t understand until they want to buy a house!

A question that comes up all the time is whether Credit Karma is accurate or not.

We will have a good look at Credit Karma accuracy and how often they update. Once you embark on your home-owning journey, everything about your credit rating is important. If there are any gray areas, they could result in you not getting the best loan with the lowest interest rate.

Is Credit Karma Accurate

Two of the three credit agencies directly report the Credit Karma scores and are fairly accurate. Credit Karma gets their scoring date from Transunion and Equifax. They use a credit scoring model called Vantage Score. Some people do not realize that there are different credit reporting bureaus, as well as scoring models.

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The primary scoring model used by lenders is FICO. Hence the term you will hear quite often is FICO score. The scores that are reported to lenders by FICO are usually a little different than what is conveyed by the Vantage Score model.

Given this, credit scores often vary from one person to the next. This fact is what causes people to assume that Credit Karma scores are not accurate. Unfortunately, that is an inaccurate statement. The scores are certainly valid, just different than FICO scores.

One of the benefits of using the Credit Karma website is enabling you to track the progress and monitor any changes to your credit.

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What is Credit Karma Accuracy Based On?

How does the Credit Karma Score compare to the FICO Score is something that people want to know. Credit Karma can generate reports from TransUnion and Equifax. They are using two out of the three credit bureaus, with Experian being left out.

Doing so makes the score almost the same and achieves a level of quality control for accuracy. When you get your score, it should be reasonably accurate, and if you feel it isn’t accurate, you should look into it.

Should You Use Credit Karma

Credit Karma is a secured site, but you will have to give personal information like a social security number before you can sign up. Without giving this number, it would be totally impossible for you to get a credit score.

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When you give this information to Credit Karma, your social security number will not count as a hard inquiry. You will be using the Credit Karma site to gather information.

Without a credit score, it would not be possible to buy a home. If you are a first-time homebuyer, it is really essential that you sign up with Credit Karma to start a ‘credit history.’

What to Expect On The Credit Karma Website

When you go onto the site, you will notice a lot of advertising for credit cards and other financial data. This is what allows you to access the site free, as the advertisers are paying the bills.

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Credit Karma will consistently be giving  tips to improve your credit score. If your score is looking a bit low, take advantage of the advice and ways to raise it before applying for a home loan.

When Does Credit Karma Update?

TransUnion will update weekly, enabling you to see where your credit score stands. You will see your current score and past scores. This will ensure that when you log into the Credit Karma dashboard, you will spot any changes and problems immediately.

If you receive an alert from Credit Karma, it means that something has changed with your score, and you had a better look at it to see if it is an activity you recognize.

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Is Credit Karma Worth Joining?

The short answer is yes! Once you start buying your first home, you will realize the importance of having a good credit score. Credit Karma will give you the necessary advice to get yourself on a solid financial track.

Don’t worry about giving personal information, as the ability to track your credit score will outweigh the concerns of providing your social security number.

Once you have a credit score, a mortgage pre-approval, and a home in mind, you will be able to get a much lower interest rate. Along the way, you will continue to receive credit tips that will ensure you maintain a solid credit score.

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If you have been thinking about joining a different credit agency, don’t. Credit karma uses two top reporting credit agencies, while some of the others only use one. This means that the credit score that Credit Karma gives you will be more accurate.

Credit Karma is also offering other services like taxation preparation and automobile valuation to customers.

How Can You Raise Your Credit Score?

  • Check your credit report for accuracy – contest any mistakes found.
  • Pay all bills on time.
  • If you are ‘in collections,’ pay it off.
  • Catch up on all bill payments.
  • Lower credit card balance to around 50% maximum.
  • Pay off as much debt as possible.
  • Make sure your credit score is accurate.
  • Don’t apply for more than two or three credit cards.
  • Use a variety of credit types to build your score.
  • Don’t move house and change jobs too often. This is seen as unreliable.
  • Create a relationship with your bank.
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The idea is to look reliable and consistent, and lenders highly value these characteristics.

Using Credit Karma and Buying a Home

Once you have been with Credit Karma for six months and got on top of all of your debts, it may be time to apply for your home loan. Of course, you will need a down payment, steady employment, and a commensurate salary with being able to purchase a home.

Final Thoughts on Credit Karma

Every week log in to your Credit Karma site to check what your credit score is doing. If you consistently take advantage of the advice, you will be well on your way to having a credit score to be proud of. Shortly thereafter, you can look forward to a goal of becoming a homeowner.

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Hopefully, you have enjoyed the advice on using Credit Karma.

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