|Industry||Personal finance, Software|
|Headquarters||San Francisco, California|
|Ken Lin, Founder and CEO|
|Products||credit scores, credit reports, credit monitoring|
Credit Karma is a free web-based credit and financial management service for US consumers. Founded in 2008, it provides free credit scores, credit reports, and credit monitoring from the national credit bureaus TransUnion and Equifax.
Credit Karma provides credit tools, such as the Credit Report Card, which summarizes a consumer’s credit report into categories with an A-F letter grade; a Credit Score Simulator, which simulates the effect of certain financial actions on credit scores; and daily credit monitoring, which sends an email alert when something important changes in a consumer’s TransUnion and and Equifax credit reports.
In addition to free credit scores and reports, Credit Karma also offers financial account monitoring through account aggregation service Yodlee. This service allows consumers to track their banking, credit card, and loan transactions and balances in Credit Karma’s interface.
Founder and investors
Kenneth Lin, who previously worked with E-Loan and Upromise, launched Credit Karma in February 2008. The start-up was primarily funded by investors Chris Larson, CEO of Prosper, and Mark Lefanowicz, former president of E-Loan.
In 2009, Ron Conway, Dave McClure, and QED Investors made additional investments in Credit Karma. In 2013, Credit Karma secured $30 million in Series B funding from Ribbit Capital and Susquehanna Growth Equity. In March 2014, Credit Karma raised $85 million in Series C funding from Google Capital and Tiger Global Management. In September 2014, Credit Karma was provided another $75 million in growth funding from major late-stage investors at a valuation of more than $1 billion.
Credit Karma’s credit scores
Credit Karma provides four credit scores from TransUnion: the TransUnion New Account Score, the VantageScore, the TransUnion Auto Insurance Risk Score and the TransUnion Home Insurance Risk Score.
The New Account score model ranges from 300 to 850, which is the same scale as the FICO score. In January 2011, Credit Karma began providing the VantageScore 2.0 and Auto Insurance Risk Score. In April 2013, Credit Karma began offering TransUnion’s Home Insurance Risk Score along with the launch of financial account monitoring.
Consumers can update their credit scores on Credit Karma once a week.
Credit Karma is free to consumers. Revenue from advertisements offsets the costs of free credit score tracking and financial monitoring.
In August 2014, the Federal Trade Commission (“FTC”) approved a final order settling charges against Credit Karma for misrepresenting to the public the security of their mobile apps and for failing to protect the transmission of their customers’ sensitive personal information. In the settlement, Credit Karma agreed to independent security evaluations of their systems every other year for the next 20 years. The FTC alleged in its complaint that Credit Karma’s mobile apps were launched with code that disabled Secure Sockets Layer “SSL” validation. The main allegations from the FTC included: that Credit Karma (1) overrode the default SSL certificate validation settings without adding back in other security measures to compensate for the override, (2) failed to appropriately test, audit, assess, its application, and (3) failed to appropriately supervise service providers’ security practices.
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- Harris, Meena (21 August 2014). "FTC Settlement Requires Fandango and Credit Karma to Establish Comprehensive Security Programs to Protect Consumers’ Sensitive Personal Information". The National Law Review (Covington & Burling LLP). Retrieved 24 August 2014.
- "Fandango, Credit Karma Settle FTC Charges that They Deceived Consumers By Failing to Securely Transmit Sensitive Personal Information". Federal Trade Commission. Retrieved 24 August 2014.
- LaRose, Cynthia J.; Jake Romero (4 March 2014). "Stop Phoning It in on Mobile Security: What Your Business Needs to Know About the Federal Trade Commission's (FTC) Settlements with Fandango and Credit Karma". The National Law Review. ISSN 2161-3362. Retrieved 24 August 2014.