As an attorney that handles Fair Credit Reporting Act cases, I am often called by consumers who claim errors on their credit reports in order to review their report. Lately, more and more often the consumer will send in a report from Credit Karma. This seems to be the hottest new thing for consumers to view their credit report and get a score. But is it a credit report? Is Credit Karma a good source to know what is on your credit report? And, is that score they give you your real credit score? While Credit Karma has some good virtues, it is not the best source to know your credit standing.
Credit Karma is a place where consumers can go to get a glimpse of their credit score and information on their credit report. However, Credit Karma is not a credit reporting agency, the reports that they turn out are not credit reports, and they are far from complete. A credit reporting agency is one that assembles, maintains and sells consumer credit information or other information regarding a consumer to third parties that will use the report to make a decision about whether to grant credit to a consumer. When one applies for credit, the bank or finance company will obtain a consumer credit report from a reporting agency and there is a price they pay the bureaus for it.
Credit Karma, on the other hand, does not sell their reports to potential credit grantors. They only provide information to consumers. In additioin, Credit Karma does not assemble and maintain credit information. Rather, they go borrow it from the real credit reporting agencies. Thus, this makes a big distinction between Credit Karma and the credit bureaus. A credit reporting agency (a.k.a credit bureau) must follow the Fair Credit Reporting Act. Credit Karma does not.
Credit Karma boasts to be the place to get your score for free. That’s a pretty good service – being able to get your score in a moments notice for free. For years, consumers would have to log into a credit reporting agency or to My Fico and purchase their score. However, what score is this? Is this the FICO score? Is this the same credit score that your lenders receive? Not entirely. As we have blogged in the recent past about different credit scores, there are different scoring models used by different types of creditors. I have often preached: its not as important to focus on your score as it is to focus on the actual accuracy of the content of your report. Your score will follow your report, and if your report is accurate, the score will be a true reflection of your creditworthiness. You only get that true accuracy from seeing an actual credit report.
The Fair Credit Reporting Act requires a credit reporting agency to provide a full and complete report to a consumer requesting it once a year. When a credit reprting agency provides a report, it must provide the consumer with all the information which it is also reporting to potential credit grantors. It also must provide a list of the persons or companies that accessed the credit rerport in the last two years.
Credit Karma does not have to do any of this. Credit Karma’s reports to not have to contain all the information a credit bureau’s report does. More importantly, it doesn’t. Hold a credit karma report up next to a report obtained directly from Trans Union, Equifax or Experian, and the difference is obvious. Furthermore, if an error is spotted on a Credit Karma report, Credit Karma has no obligation to conduct any investigation as do the bureaus.
Thus, while Credit Karma can tell you what your score may be, it certainly cannot tell you all you may need to know about your credit. If you are looking to correct an error on your report, and you want to enlist our help, we would highly recommend obtaining your report from a major credit bureau. FOR MORE INFORMATION ON HOW TO ASSURE YOUR CREDIT REPORT IS ACCURATE, CONTACT US AT SMITHMARCO, P.C. FOR A FREE CASE REVIEW.