How Much Does Credit Karma Spend Giving You Free Credit Scores and Reports?

Credit Karma pays millions for free credit scores
One of the most interesting tidbits which came with the announcement that Credit Karma will now be offering free credit reports from TransUnion (see how their offer compares to AnnualCreditReport) along with free credit scores was the amount they spend to secure the information which they then give away free to you. In an article about the new free credit reports on VentureBeat, CEO Kenneth Lin says, “Credit Karma pays tens of millions of dollars for credit reports every year, but advertising pays.”

I contacted Credit Karma to ask if this was what they expected to pay out to obtain the credit reports for their new service, or if this was just a general amount they pay to secure the credit scores and reports. I was told this was just a ¬†general amount by their communication department. “With more than 20 million members, we will pay out tens of millions of dollars to obtain the scores and reports for our members.” When I asked for the exact number they pay out, I was told that was information they did not give out, but that doesn’t mean we can’t look into the information we do have to make some guesses.

Since this figure was announced with the launch of the new credit report service, I assume the company has been paying out the tens of millions for the credit scores alone, since they wouldn’t have paid anything out for the reports when the interview took place. I also assume they aren’t paying out over a hundred million dollars, or they would have said that instead of “tens of millions” when quantifying the amount these freebies cost them. If that’s the case, they are paying less than $5 a person for this material, which is a pretty darn good deal. Now, this is just one part of their overall cost. They have advertising costs and costs to run the company as well, so this isn’t the total amount they spend on each user.

Credit Karma is one of those companies where the saying, “If it’s free, then you’re the one that’s being sold” aptly applies. The company doesn’t give scores and reports for free just to be nice. They do it to make money, and they make their money by offering deals to the users such as credit cards and other financial services. When a user signs up for one of these, the company gets paid a referral fee.

The company feels confident they can make enough money off of you to give you both a credit score and report on their dime while spending tens of millions of dollars in the process. The numbers obviously work out or their business model would collapse. So while you are able to see your score and report without having to pay for it directly, don’t be fooled into thinking you aren’t paying for it at all — you’re just doing so in other ways.

(Photo courtesy of Damian Gadal)

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13 Responses to How Much Does Credit Karma Spend Giving You Free Credit Scores and Reports?

  1. william says:

    It makes perfect sense. Why wouldn’t a company spend $5 or $10 on you if they know in return they can average earnings $20 or more.

  2. darren says:

    Yes. They found something that people wanted and provided it for free, then convince them to buy other products instead. not a true bait and switch, but a modified version of it. It seems to be working for them

  3. faith says:

    People, you don’t need any of this!! Listen to Dave Ramsey about credit scores. You don’t need one. You want your credit score to be zero! That’s right, zero. If you have a zero credit score, that means you have no debt. Stop worrying about what your score is or what your report says and pay everything in cash!

  4. scott says:

    Faith, you really need to stop smokin’ from the Dave Ramsey crack pipe.

  5. ed says:

    That is the most ignorant thing I have ever heard. What about purchasing a home for your family or other high cost items? It’s one thing to be conscious about spending, it’s another to be trapped in a world of fantasy.

  6. Zombie Dave says:

    If you have a credit score of zero that means you have never had credit. If you have never had credit, no one will lend to you. If no one will lend to you, you won’t be able to go to college. If you dont go to college, you end up posting the dumbest crap in the world on the internet. Don’t post stupid crap on the internet Faith.

  7. Clint says:


    Interesting article, regardless. I always assumed they had some sort of deal with TransUnion, but this sounds a bit expensive. Of course, they’re obviously making a nice chunk of change, and I’m assuming they’re going direct to the CC companies as ‘affiliates’ for those offers, so they probably earn a lot more than we could ever guess.

  8. herdjohnson says:

    When applying for a credit card I always try to go through CreditKarma. I’m going to apply anyway, might as well support the company that is helping me protect myself at no cost to me.


    “Spam protection: Sum of 7 + 9 ? *”

    How did faith get past the spam detector? Someone who posts that drivel surely can’t get past the question above, could they?

  9. faith says:

    The only people smoking things are those who perpetuate the useless system. Comments like these are only made by people who can’t argue on the merits of the facts.

  10. faith says:

    If you can’t afford to pay for it in cash, then you shouldn’t buy it.

  11. faith says:

    I paid my way through college with not loans. It’s not easy, but it can be done, and you have to make sacrifices. The system wants you to take out college loans. If you play that game, you’re always going to be in debt.

  12. faith says:

    Comments like this are made by people who can’t argue the facts.

  13. Donna says:

    Don’t buy a house usas you can pay cash…ok. So where am I supposed to live in the meantime? Rentals require a credit check. No credit, no rental. I guess I could live under a bridge, but my boss frowns on that whole unwashed look.

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