Credit Karma is a personal finance company that offers consumers free access to credit scores, credit and identity monitoring, a credit report dispute tool, and customized recommendations for credit card, loan, and insurance products.
The company makes money by earning a commission when a consumer completes the purchase of a product that it recommends.
Credit Karma uses AI to power a platform that provides tools that consumers can use to manage all aspects of their financial lives. In addition to the services mentioned above, it offers:
- Free tax preparation assistance
- High-yield savings accounts through a partnership with MVB Bank
- Guidance for the steps consumers 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 that fit consumers, based on the odds of approval and their credit scores.
Key Takeaways
- Credit Karma is a San Francisco-based personal finance company founded in 2007.
- It makes money by receiving a fee every time a user purchases a product or service that it recommends.
- The company's leadership includes CEO Kenneth Li and CTO Ryan Graciano.
- It offers free access to TransUnion and Equifax credit scores as well as tax preparation assistance, and other services.
- Intuit acquired Credit Karma in 2020.
Credit Karma's Industry
Credit Karma's parent, Intuit, operates in the Software-Application industry within the Technology sector.
Credit Karma became part of the global financial technology platform of Intuit in 2020.
Credit Karma's mission is to put the power of technology, data, and AI to work to make personal financial management easier and stress-free. With so many financial services companies vying for the attention of consumers, its strength lies in making custom recommendations for financial products based on someone's finances and credit standing.
Credit Karma's competitors include NerdWallet and Credit Sesame, both of which also offer free credit score information and financial tools. In addition, Intuit states that its business segments, including Credit Karma, face intense competition from:
- Business software providers
- Private and publicly-funded tax preparation and filing service providers
- Accounting, consulting, and tax firms
- Software companies and banks that provide payments services
- Software companies that provide personal finance management products and tools
- Companies that offer consumer financial offerings
- Financial institutions
- Credit bureaus
- Large platform companies with competing technology solutions
Credit Karma has incorporated popular features of the the online budget planner, Mint.
Credit Karma's Financials
Credit Karma is one of four segments of the financial services company, Intuit. Its revenue comes primarily from cost-per-action transactions. These result in e.g., credit card issuances and personal loans. It also earns revenue from online advertising that generates leads relating primarily to mortgage and insurance. Credit Karma Money also generates revenue for the segment.
Intuit's 2023 annual report reported the segment's financial results for the 2023fiscal year (FY). Additionally, on May 23, 2024, the company announced financial results for the quarter ended April 30, 2024.
Net Revenue
For FY 2023, revenue was $1.63 billion, a decrease of 9% from the previous year's $1.8 billion. For the third quarter of FY 2024, revenue was $443 million, an increase of 8% over the previous year's third quarter.
Credit Karma accounted for 11% of Intuit's total revenue in FY 2023 and 7% of total revenue in Q3 2024.
Operating Income
For FY 2023, operating income was $428 million, a decrease of 19% from the previous year's $531 million. For the third quarter of FY 2024, operating income was $110 million, a decrease of 1% from the previous year's third quarter.
History and Leadership
Credit Karma was founded in 2007 by Kenneth Lin, Ryan Graciano, and Nichole Mustard. It is headquartered in Oakland, Calif.
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.
Co-founder Nichole Mustard left Credit Karma in 2023.
Recent Developments
In December 2023, Credit Karma launched a new feature that would provide members with up to five days earlier access to government funds than is usual through financial institutions. Members can tap into their Social Security benefits, Veteran's Administration benefits, and Supplemental Security Income (SSI) by enrolling in Credit Karma's early direct deposit program.
How Does Credit Karma Make Money?
The company makes money primarily from the fees it earns when a customer completes a transaction that starts with a tailored recommendation on its personal finance site. This might involve a financial product such as a credit card or personal loan.
When Did Credit Karma Go From Private to Public?
In December of 2020, Credit Karma became part of the publicly-traded financial technology firm Intuit when the latter acquired Credit Karma for approximately $3.4 billion in cash and equity valued at $4.7 billion.
Was Credit Karma in Trouble With the FTC?
Yes, the Federal Trade Commission found that Credit Karma falsely informed customers that they'd been pre-approved for credit products. Yet they were denied approval when they applied. Credit Karma made a financial payment to settle with the FTC in January 2023.
The Bottom Line
Credit Karma is a personal finance company that is owned by Intuit. It provides free access to credit scores and other credit services as well as personalized recommendations for credit cards, loans, and insurance.
It makes the majority of its money when people click through its site and complete transactions for financial products offered by other providers.