…I signed up for CreditKarma.com so I can now obsess check my score’s progress. One of the elements of my 3-step plan towards purchasing my own little house is improving my credit score so I can qualify for the best and lowest APR mortgage loan. Now that I’m privy to amortization charts, I can quickly compare a mortgage loan at 5.5% versus one at 7% and see that the amount of interest paid on the 7% loan is nearly twice the amount that someone would pay on a 5.5% APR loan. Excellent credit has its benefits!

What I like about CreditKarma.com

I really like how quickly I can check my credit score with CreditKarma.com. Of course, the score I’m seeing is my Transunion score and the last time I pulled all three credit reports my Experian score was actually higher. My Transunion score was smack dab in the middle, sandwiched between the much lower Equifax score and the slightly higher Experian score. I can only hope that my other two scores are steadily rising as well. A few other features that I find beneficial are:

• The report card: CreditKarma.com analyzes the credit score based on a few factors, such as length of history, late payments, type of credit, payment history, and new credit. I scored a ‘B’ overall. My length of history is lacking and my types of credit is also poorly misrepresented.
• Score Simulator: Hypothesizing what can happen to a credit score, good or bad, only makes me more diligent to make sure I make all my payments in a timely manner and keep my credit usage low. The simulator shows how quickly a score can plummet versus how slowly it rises.

Where CreditKarma.com needs to improve

Some of the things I really like about Credit Karma are the same things that need a little tweaking. For instance, the Score Simulator is terrific for seeing how quickly a score can drop. However, it lacks the ability to hypothesize what happens when all of your current debt is paid off. I can slide the “pay off debt” scale into the negative (like pay off my student loans), yet my score remains the same. Here are a few other things that need a little more work:

• The report card: I was able to see where I was right on target with my credit. Yet, the one area where I scored an ‘F’ was in the types of credit I currently have. This credit score factor is very elusive. When I used the simulator and found out what would happen to my score if I took on a mortgage, my credit dropped significantly.  The simulator may not have factored in that I’m missing an installment type loan that could raise my score. The report card and simulator aren’t working in conjunction with each other.
• Additional Savings Options: Credit Karma provides the credit scores for free, so they need to make money somewhere. Here is where they make a little money – offer credit cards and insurance from affiliates at lower rates. I found this feature annoying and slightly deceptive. If I signed up for another credit card at a lower rate, Credit Karma is estimating I could save around $238 over three years. However, signing up for another card could potentially lower my score based on their simulator. This feature still needs a little work and more explanation.

Overall I like the ability to view my score whenever I feel like it and for FREE. Though it may only be tracking my Transunion score, it does give me an indication of if I’m moving in the right direction or have fallen off the path toward excellent credit, my ultimate goal.