How Credit Karma Makes Money

Credit Karma offers consumers access to credit scores and other credit information from TransUnion and Equifax, as well as tools for consumers to improve their ratings. Users can access Credit Karma’s information for free and as frequently as they desire, without registering with a credit card. By contrast, the three major credit bureaus provide complete credit score information for free to consumers only once a year, charging a fee for additional requests. But just how does the company make money? This article highlights how Credit Karma earns revenue along with some other vital information.

Credit Karma: An Overview

Credit Karma is a fintech services company founded by Kenneth Lin, Ryan Graciano, and Nichole Mustard in 2007. The goal was (and still is) to allow consumers to access their credit scores for free. Since then, the company expanded its offerings. In addition to providing credit scores, Credit Karma also:

• Provides free tax preparation assistance
• Offers high-yield savings accounts through a partnership with MVB Bank
• Guides consumers about what next steps they should take after accessing their credit information, including tailored personal, home, and auto loans based on income and credit scores

The company recommends credit cards and other financial products tailored to each consumer based on the odds of approval and their credit scores. Credit Karma earns a commission if you buy a recommended product.

Fundraising and Financials

Credit Karma boasts roughly 130 million members in the U.S., Canada, and the U.K. According to Crunchbase, Credit Karma raised $868 million over eight rounds of funding, the most recent of which was in March 2018. The company at that time was valued at $4 billion. Its lead investors include Silver Lake Partners and SV Angel.

History and Leadership

As noted above, Credit Karma was founded in 2007 and began offering its first free credit scores in 2008.

The San Francisco-based company’s CEO Kenneth Lin spent the early part of his career at E-Loan, an online lender specializing in debt consolidation, and UPromise, a subsidiary of student loan service Sallie Mae which runs a customer loyalty program focused on saving for college and paying down student loans.

Co-founder Ryan Graciano is the company’s chief technology officer (CTO). He is responsible for the company’s engineers who oversee the creation of new products.

Nichole Mustard, another co-founder, is Credit Karma’s chief revenue officer. She oversees the company’s business development team, which provides consumers with value through business intelligence, data science, and various financial partners.

Recent Developments

On Dec. 3, 2020, Intuit (INTU) announced the completion of its acquisition of Credit Karma for about $3.4 billion in cash and $4.7 billion in stock and equity awards. Intuit, the maker of Turbotax and QuickBooks, first announced the agreement to purchase the company on Feb. 24, 2020, for $7.1 billion in cash and stock.

In October 2020, Credit Karma announced a new offering to qualifying members: checking accounts for those who already have a savings account with the company.

How Credit Karma Reports Diversity & Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Credit Karma and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Credit Karma releases. It shows Credit Karma does not disclose any data about the diversity of its board of directors, C-Suite, general management, and employees overall. It also shows Credit Karma does not reveal the diversity of itself by race, gender, ability, veteran status, or LGBTQ+ identity.