Have you heard about Credit Karma and wondered what the heck it was and how it works? You are not alone as many folks have heard their advertisements and pondered how useful they are.
If you are a real estate agent who works with a lot of homebuyers, especially ones that may need a little financial assistance, it’s something worth considering educating yourself on.
After hearing about Credit Karma myself a little over a year ago and doing a little research about what it does, I decided to mention it to a couple of people who had asked me if I knew of anywhere they could get some credit advice.
At first I had totally forgotten about Credit Karma, but then it dawned on me that it might be worth a try. I decided to mention it to them!
They checked it out and later told me they liked the fact it was free. I asked them what else they found helpful, and the thing they liked best was knowing how a specific decision they made would impact their credit, like if they canceled a credit card.
Having information like this was handy. So many people don’t understand credit and it’s so easy to make a simple mistake that could set you backward.
Potential first-time buyers are often bombarded with ads about signing up for one of the many free credit checks found online. These are frequently advertised on the internet, indicating that they might not be as free as they first appear.
Most of these “free” offers will ask you for your credit card details, though they won’t charge you immediately. You will have a trial period to look at your free credit score, but if you forget to cancel, you will be charged. They are counting on a certain number of people to fall into this trap in order to pay for these free credit checks.
Credit Karma is different. Credit Karma offers a free credit report without the need to enter your card details. There are many first-timers who would like to become homeowners at some point in the not too distant future but need to improve their credit standing. For these folks, Credit Karma could be a godsend.
This is where a real estate agent can step in and let them know how Credit Karma can offer them assistance.
Let’s take a look at exactly what Credit Karma does and how it works. You’ll put yourself in a better position as an agent to be their guiding light.
Free credit score check
When you sign up to Credit Karma, consumers don’t have to enter card details or subscribe to monthly services. The site makes money mainly through selling targeted advertising, which means that you don’t have to pay to get your credit report.
Signing up to the site is easy, and gives you access to your credit report and score for free. Your report will update every week, with the score updated daily.
While this may all sound great, however, there is a downside. They don’t use the same credit scoring method used by lenders. Normally, lenders require a certain FICO score when applying.
Credit Karma doesn’t use the FICO scoring system but still shows you your credit situation through reporting from Equifax and TransUnion. You can use the service to monitor your credit daily, check your VantageScore as well as your auto insurance score — and all for free.
Credit score simulation
When you’re interested in buying a home one of the things consumers need to be conscious of is their credit standing and how they can improve it. By using Credit Karma, you can see exactly how your actions will impact where you stand credit-wise.
For example, when you are applying for credit, it can change your score, but how much of an effect will it really have? If you’ve ever wondered how much of a difference an application for a new credit card makes, Credit Karma has the answer.
The credit score simulator lets you see what will happen to your score when you apply for credit or other financial decisions. If you are preparing to apply for a mortgage, you can use this simulator to see what you can do to improve your score, increasing the chances of being approved, and reducing the interest you may have to pay.
You can look at what will happen to your score when an inquiry is made on your file, when you pay off your credit balance and when there are changes to your public records, among other actions. It will also let you compare your score to other people in a similar situation to you.
Having information like this can be immensely helpful to those who want to make homeownership a reality. Real estate agents who specialize in the first-time homebuyer market can make more clients aware this program exists.
Report card on your credit
Credit Karma allows you to check how your credit is graded using their Credit Report Card. This gives you an A to F grade in the following areas:
- On-time payments
- Age of accounts
- Number of accounts
- Credit utilization
- Hard inquiries on your credit report
- Negative marks
- Overall picture
This is a straightforward way of showing you where there are problems, and what areas you should look at to improve your credit score. Potential homebuyers can take this information and put together a plan that will put them in a better place financially.
What this means is the dream of owning a house can be quicker than imagined. An agent who helps make this a reality is more than likely going to have someone who is very grateful.
Other features of Credit Karma
Other services provided by the site include information about your debit accounts. It will show you how much the balances have moved up or down since the last time it was updated.
They will recommend products to you as well. Based on your credit history, they will show you cards which you should be approved for. They use information based on the approvals of other users of the service to predict if you should be approved as well.
What about other companies similar to Credit Karma?
A question that real estate agents often get asked and you should be prepared for is, “Are their other similar companies to Credit Karma”? There are other companies in the credit scoring and credit monitoring industry out there as well.
One such company is Credit Sesame. Quite often potential homebuyers will wonder what the difference is between Credit Karma and Credit Sesame. While there are some strong similarities between what these companies do, the biggest difference is that Credit Karma is a free service and Credit Sesame is paid.
They are both reputable companies that have been around for a while. Credit Karma was founded in 2007 and Credit Sesame in 2010.
You can see an excellent review and comparison of both companies at RISMedia’s Housecall.
Final thoughts on using Credit Karma
Credit Karma has been around for quite a while, providing members with free information about their credit. It lets you do things that will give you a much better understanding of your credit rating and the things you can do to improve it.
This will help potential buyers who are looking to get a new loan or fix financial problems that have been holding them back. Moreover, it can be especially helpful for those who want to make their dreams of homeownership a reality.
Consumers who have been put off by free credit checks when asked for your payment information before, it could be time to give Credit Karma a look — a service that is actually free!
Credit Karma has a lot to offer, without being a trial that you need to remember to cancel at the end of the month. Getting to know what Credit Karma does can put a real estate agent in a much better position to help out potential future first-time buyers.
Bill Gassett is a nationally recognized real estate leader who has been helping people buy and sell homes for the past 33-plus years. He has been a top agent with RE/MAX Executive Realty, which serves many towns across the state of Massachusetts. Check out his blog.
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