★ Rockstar Review: Credit Karma (Monitor Your Credit Score For Free)

This is part of our Rockstar Reviews series. Be sure to check out all previous products we’ve reviewed!

Who it’s for: Anyone who wants to view and monitor their credit score and report. Ease of use: Create your account, verify your identity and you're done. What I liked about it: Makes credit monitoring super easy; just login to your Credit Karma profile and stay up to date on your number. That's it. What I didn’t like about it: Includes too many "offers" for credit cards and other ways to, coincidentally, spend money.

CreditKarma.com (Free!)

An Easy Way to Monitor Your Credit Score and Report

Credit Karma is your one-stop shop to monitor your credit score for free - as often as you want. Just login to your Credit Karma profile and your credit score is displayed. No clicking around. No hassle. Login and it's there.

What is a Credit Score?

Your credit score is what banks and other financial institutions use to determine how likely you are to repay a loan. It can also determine your loan's interest rate. Your score contains your payment history, amount of open credit, delinquencies, public records and a few other financial qualifiers. Credit scores typically range from 300 to 850 - worst to best. The higher your credit score, the better your chances of getting a loan at a low interest rate. About 1/3rd of your score is determined by your payment history. Another third comes from outstanding debt. The final third of your score is based on how long you've had credit, credit types and recent new credit (i.e.: opening a new credit card). Credit Karma uses the new VantageScore 3.0 standardization being adopted by major credit agencies, making your credit score much more consistent between agencies (though it still may not completely match). It also makes qualifiers like payment history, credit type and credit utilization weigh much more significantly than other factors, as well as removing collection accounts that have been paid in full which is nice. Oh, and don't worry - checking your score through Credit Karma will not affect your credit score because it's not an "official" credit check.

Here's How it Works

Credit Karma uses your information to obtain credit scores from two reputable financial institutions (TransUnion and Equifax), and then displays both numbers in your Overview page. The interface is clear and uncluttered, making it an easy process to navigate through the pages that interest us the most. Click over to the Credit Reports page for a more detailed look at your credit numbers. This is how the Credit Reports page looks for me: Super cool. It's easy to see that there were no missed payments. The term, payment amount, balance, as well as a monthly-break out of payment history is all right there, nicely organized and easy to read.

Your Recommendations

At the top of the page, click on the My Recommendations link. Here is where Credit Karma makes their money. The system will analyze your credit score and payment history and recommend a collection of credit cards that maximize rewards and cash back. There is no obligation to sign up for a single card, but it can be enlightening to learn about your options. If you take advantage of these offers, they make some cash. Be careful! While it's educational to learn about your options, resist the temptation to sign up for a bunch of new credit cards. Annual fees add up and carrying a bunch of credit cards around with you may encourage additional spending. Only apply for the cards that you need.

Credit Score Simulator

One of my favorite features is the Credit Score Simulator, which is accessible by clicking the link down the left hand side of your Overview page. The simulator is Credit Karma's best guess at what affect major financial decisions may have on your credit score. For example, how would an auto loan affect your score? Let's find out. Click the Get a New Loan link from the Credit Score Simulator page, then select Auto Loan. Next, enter the dollar amount, then tap the Submit button. Your estimated score is displayed. In my case, I entered $50,000 and my credit score dropped from 833 to 823.

Play around with the numbers and different loan types to get a feel for how your score might change. What happens if you quit paying your taxes? Or go into foreclosure? Or let your credit accounts go past due? Take some time to go through some of these options. It's interesting to see how much these factors can change your score! It shows you in clear numbers what not to do. Remember, these are only estimates. There's no way for Credit Karma to know exactly how your numbers will change. However, it is a good ballpark estimate. Check out the Resources link at the top of the page for other calculators.

Their New Tax Service

. Best of all, they guarantee no up-sells or hidden fees. Gravy!

What I Don't Like About Credit Karma

Credit Karma needs to make money somehow, and they do it through credit card recommendations, but also through other financial services like car loans, mortgage refinancing and even student loans. Much of the website is devoted to these financial services even if we have no interest in them. To their credit, we are not bombarded with pop-ups and other intrusive advertisements for these services. They are easily accessible from the top of the page and clearly marked for those who may be interested. For the rest of us, we will probably spend the majority of our time on our Dashboard and Credit Report pages, as well as checking out their calculators and simulators.

You can sign up for free here.

***** Most Rockstar Reviews here include affiliate links to the companies being featured. This one does not, but if they ever offer it to us we'll gladly swap it in as we're big fans :)