Credit Karma has provided free credit analysis and financial literacy and management tools to clients online since 2007. Based in Oakland, California, the company claims over 130 million members in the United States, Canada, and United Kingdom. While best known for offering free credit scores, Credit Karma's services extend through its partnerships to identity monitoring, credit cards, insurance, banking, and credit building.
Business Insider's personal finance team compared Credit Karma Credit Builder to the three major credit bureaus (Equifax, Experian and TransUnion), so you can improve your credit score across the board.
Credit Karma Credit Builder Cons
- Payout threshold on savings — Contributions to your Credit Karma Credit Builder savings account are locked until they total $500. You may be able to access those funds earlier by calling Credit Karma (or by closing your account). Otherwise, you'll need to plan on being without that money until you hit the threshold.
- Abysmal customer service — We attempted to contact Credit Karma's customer service multiple times while writing this review, and the experience substantiated the extensive negative feedback the company has received from customers.
- Maximum credit score requirements — Unlike most credit products that require no minimum credit score for eligibility, Credit Karma requires your credit score to be under 619 to apply.
Open an Account
$0
- No interest or fees
- Can skip up to two months
- Reports to all three bureaus
- Flexible payments
- Poor customer service
- Maximum credit score requirements
- Deposited money is locked in account until you save $500
Compare Credit Karma to Other Credit Builders
$0-$6.95 monthly + optional $49.95 fee for retroactive reporting
- Rent reporting is free of charge
- Credit score monitoring
- $1M identity theft insurance
- Three-bureau rent reporting
- Utility and cell phone payments
- Doesn’t require landlord’s approval
- Poor customer service experience
- Cell phone and utility payments only reported to TransUnion
Self Rent Reporting reports your rent and other bills to the credit bureaus. This improves your payment history and as a result, your credit score, without needing to take on debt. One of the companies listed in our guide on the best rent reporting services, Self Rent Reporting stands out for offering several credit building perks under one competitive price.
Self Rent Reporting- Reports to all three credit bureaus
- Connects directly to your bank account
- Reports your rent, cell phone, electric, water and gas payments
- $49.95 optional fee for 24 months of retroactive rent and utilities reporting
- $6.95 per month
- Add two years of past payments
- Results vary. You may not receive an improved credit score. Not all lenders use scores impacted by rent/utility payments.
no monthly service fee
up to 4.00% bonus
$0
- 3 Savings Pods that let you earn up to 4.00% bonus
- No minimum opening deposit
- No monthly service fees
- No overdraft fees
- No instant transfer fees to other Current members
- Early direct deposit
- Debit card included
- Budgeting tools: Round-ups and Spending Insights
- Earn cash back on debit card purchases
- $2.50 out-of-network ATM fee
- Can't overdraw from your account without the Overdrive feature
- Access to 40,000 fee-free Allpoint ATMs
- You may overdraw up to $200 from your account with no overdraft fees if you're eligible for Overdrive
- To be eligible for the Overdrive feature, you'll need to receive direct deposits $500 per month
- 3 Savings Pods: You may deposit up to $2,000 in each Savings Pod; Money that is kept in Savings Pods can earn 4.00% bonus
- Round-Ups: Debit card purchases are rounded up to the nearest dollar and the change is deposited into a Savings Pod
- Spending Insights: You can create a budget that keeps track of specific categories of spending; Spending Insights monitors how much you spend and can issue alerts if you are close to your limit
- Cash back: You can earn cash back at 14,000 select stores when you use your debit card; Points be redeemed at the Current Shop for cash
- Issued through Choice Financial Group (Member FDIC)
$0 intro for the first year, then $25
28.24% Variable
No credit and limited credit
- Easy to be approved with bad (or no) credit
- Effective tool for building credit
- Automatically be reviewed for credit limit increases
- No welcome bonus
- No rewards for spending
- $25 annual fee
Getting approved for a credit card can be challenging if you have a negative or non-existent credit history. The Self Visa® Credit Card offers an innovative solution that bypasses the traditional credit card application process, making it easier to get approved while also helping to build or repair your credit. However, getting the card involves several steps, as well as costs you wouldn't incur with other credit cards.
Self Visa® Credit Card- *$0 annual fee for the first year only. $25 annual fee after. 28.24% Variable APR. Limited time offer.
- To be eligible for the Self Secured Visa you first have to have an open Credit Builder Account, make three monthly payments on time, have at least $100 in savings progress and have your account be in good standing
- There are no hard credit checks
- Minimum credit limit is $100
- Minimum security deposit is $100
- Credit limit increased as you make monthly payments towards your Credit Builder Account
Credit Karma Overview
Credit Karma Credit Builder is a credit builder tool that helps you build credit by impacting some of the largest factors in determining your credit score: payment history, credit utilization, age and type of credit, and balances. Credit Builder uses a revolving Line of Credit to help you save money. Every payment you make toward the balance on your line of credit is reported as an on-time payment to the credit bureaus.
The qualification requirements for the Credit Karma Credit Builder account are mostly straightforward. You must be at least 18 years old with a valid United States address and Social Security number. The one uncommon requirement is that only applicants with TransUnion credit scores below 619 are eligible. If your score is higher, Credit Karma reasons, the Credit Builder may not improve it. There are no minimum credit or income requirements, and applying won't result in a Credit Karma Money Spend account. Until then, you must contact Credit Karma online and wait for a response.
Credit Karma Alternatives
Credit Karma Credit Builder vs. MoneyLion Credit Builder
The MoneyLion Credit Builder Plus Loan is a good alternative to Credit Karma. Like Credit Karma, it reports positive payment history to all three credit bureaus — but where it will differ is the cost. MoneyLion has a $19.99 monthly membership fee in addition to the monthly payment for the loan, which together can make MoneyLion much more expensive than Credit Karma.
If you are choosing between Credit Karma and Money Lion, Credit Karma is the budget-friendly choice. Money Lion is doing the same thing as Credit Karma, just with a higher price tag.
Read our how we rate credit products.
FAQs
How does Credit Karma Credit Builder help improve my credit score?
Credit Karma Credit Builder helps improve your credit score by reporting your regular on-time payments to the credit bureaus. This builds positive credit history, which can impact your credit score over time.
What are the costs associated with using Credit Karma Credit Builder?
Credit Karma's Credit Builder account has no fees or interest charges, making it a good fit for anyone looking to build credit by establishing a track record of on-time payments without going into debt.
Do I need a credit history to start using Credit Karma Credit Builder?
You do not need a credit history to start using Credit Karma Credit Builder. Credit Karma's only credit requirement is that if you do have credit history or a credit score, that the credit score be below 619. If you have a credit score of 619 or above, your score is high enough that the credit builder may not improve it.
Can using Credit Karma Credit Builder negatively affect my credit score?
Yes, using Credit Karma Credit Builder can negatively affect your credit score. Just like with any credit builder account, you must commit to making all payments on time; late and delinquent payments can negatively impact your credit score.
