Credit Karma is a credit score tracking service that is not a scam in the traditional sense. They do offer you something for free- your FAKO score. But you should understand that they are NOT providing you with your FICO score the one that almost all banks and lenders use. The FAKO score could be off by as much as 50 points in either direction and should only be used as a guide.
They have a nice fancy advertising platform and I’m sure that for 90% of their users the service is valuable.
The problem is for those other 10% of us that have our information sold onto to 3rd party companies, are told our perfectly normal credit is too ‘think’ for their free credit score, or full their failure to use a SSL for their Smartphone app.
The FCC recently weighed in on the latter, Credit Karma’s mobile app SSL failure, by fining the company for “failure to properly secure data that consumers imputed on their mobile apps, leaving them at risk of being hacked.” This has reported been addressed by the company but the most recent FCC test results have not yet been released (per Credit Secure website).
Since their program focuses on consumer credit information, their breach directly exposed sensitive personal financial information of their customers including Social Security Numbers, names, dates of birth and home addresses along with credit report details such as account names. For hackers, this is like the holy grail.
To me, this proves that the company does not do business in a good faith manner and in a sense truly living up to the Credit Karma scam rumors. In 2014, as the data breach frenzy of the holidays in 2013, there is simply no excuse to not take every measure possible to secure your customers personal information. This is especially true for a company strictly deals with credit monitoring. They have no excuse to not be using robust SSL certificates on each and every server the store customer info on.
Their FCC settlement requires the company to undergo independent security checks for the next 20 years to ensure they are using industry standards to secure consumer data.
The company’s official response was:
“Credit Karma is actively cooperating with the FTC and entered into this agreement to reinforce its commitment to data security. This issue was limited to mobile applications operating on unsecured networks only, and has since been addressed. There are no known individuals who were affected as a result.”
While their response has clearly been spun to minimize the potential fallout, you can safely assume the FCC would not be involved if this breach truly did not affect any consumers.
How Much Is A Free Credit Score Worth To You
The problem with Credit Karma score is not that it is free. That is the hook so to speak. While it is true that it is not the same score as your FICO score, it is a somewhat accurate representation of your credit file. They use their own scoring metrics to arrive at the number they give you. The problem is that this “free” credit score service opens up your credit file to 3rd party companies to send you offers for.
>By signing up for Credit Karma, you are agreeing to give these 3rd party companies access to your credit report, which they then sell to companies who will potentially send you offers, such as credit cards, car loans, payday loans, etc…
While you may not mind that type of exposure, you need to ask yourself if companies like Credit Karma or My Fico are being upfront about their intentions. If you don’t mind these type of 3rd party offers or having your credit report open for all to see, then the ‘free’ score is probably fine with you.
For me, as a past victim of identity theft, I would advise consumers to never open up their credit file in this way. You have enough to worry about by other companies already having direct access to your credit history, without granting a free for all from 3rd party companies by giving them the green light to review your finances. For example, one user reported that within 48 hours of opening an account, they started getting solicitations from debt collectors (reddit image of collection letter from Cach LLC). This was because their info was shared with 3rd party collectors- even if Credit Karma had no intention of sharing with that type of junk debt buyers.
Another Problem For Consumers After They Leave Credit Karma
One consumer that contacted us said that they after leaving CreditKarma.com because they were told their credit history was too “thin” to get their free credit score, their information was immediately sold on to 3rd party credit card companies.
In fact, within 12 hours of asking CreditKarma.com to close his account and remove all his sensitive information, this consumer had a new email for a secured credit card from Orchard Bank. This is indisputable evidence that Credit Karma sells this information on because this consumer had created a brand new email account prior to signing up just to test what type of spam offers he was going to get.