Free Credit Report – I’m going to be honest, I usually cringe a bit after hearing those three words. Websites like freecreditreport.com often run deceptive marketing campaigns tricking people into thinking they can get a free credit report, and then charging them a monthly fee.

Many copycat sites continue to follow this model, so needless to say I was fairly skeptical when I first heard about Credit Karma. However after checking out the service I can say that I finally see light at the end of the tunnel.

I’ve been hearing about Credit Karma for quite awhile, and I even follow their daily blog. However I never really had a chance to check out the service until now so going in I really didn’t know what to expect. The first thing I wanted to find out was how can a service like this offer me a free credit score, if everyone else is charging for them.

The answer is actually simple – advertising.

By offering you your credit information for free, Credit Karma is able to pair you up with financial offers that you are likely to qualify for based on your credit score. If you’ve ever used Mint.com this works the same way. After signing up and reviewing your score, you’ll notice that bank, credit card and loan offers are displayed on the home page – these companies pay Credit Karma for sending them leads.

I think for the consumer this probably works better on Mint because they can show you offers that will save you money based on your spending habits, but regardless I would take this over having to pay for a report any day.

The overview page is where you first land after singing in, so needless to say this is where the credit and financial offers that are available to you are displayed.

This is probably my favorite feature, you are given grade for each of the 7 factors that may influence your credit score. These factors are:

• Open Credit Card Utilization
• Percent of On-Time Payments
• Average Are of Open Credit Lines
• Total Accounts
• Hard Credit Inquiries
• Total Debt
• Debt to Income Ratio

If you’re looking to improve your credit score, the Credit Report calculator is great because it shows you exactly what you need to focus on to improve your score and you can see how much weight each factor carries.

Obviously, this page displays your current credit score as well as a graph of your credit history. The credit score is pulled from TransUnion which is one of the three major credit bureaus.

One thing that’s important to note is that although this score is pulled from a credit bureau, it is not a FICO score, meaning that it doesn’t use the FICO score equation.

Credit Snapshot shows you how lenders view your credit score, and where you rank in relation to US consumers.

Many times with a credit score service you can see where stand by national percentile, but that’s about it. The Credit Compare page allows you to see where you rank in relation to users in your state, and also users in your age range. You can even see where you stand compared to other users with your email domain. I happen to use gmail and my percentile was a bit lower for that one, which leads me to believe that the majority of gmail users have better then average credit.

Credit Karma has a lot of awesome features, however some of these features don’t always work and that proved to be the case (for me at least) with the Credit Simulator. I was really looking forward to messing around with it but after having an error message appear every time I tried to change more then one field I eventually gave up. Hopefully when I visit the site again next month to see if my credit score was updated, this will be fixed and I can get a chance to play with it.

Credit Karma reminds me a lot of Mint in its early days. I ran into a few minor technical issues, but overall they’ve built a great service. This is definitely a service I can see myself continuing to use. Although Credit Karma doesn’t provide you with a FICO score – it gives you an official score from TransUnion, provides you with an array useful tools, and most importantly, it’s free.

(1 votes, average: 5.00 out of 5)

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