Experian and Credit Karma are both well-known financial services companies that offer digital tools to help you track your credit history and improve your credit scores. Here’s an overview of their offerings, how they differ, and how you might use them to improve your financial health.
Experian is a global financial-data company best known in the U.S. as one of the three national consumer credit bureaus. In that capacity, it compiles the credit reports that contain credit usage and debt-payment histories of millions of U.S. consumers. It provides credit reports to lenders such as banks, credit unions, and credit card issuers. Experian also offers U.S. consumers various services, including free copies of their credit report, FICO Score credit scores, and advice about credit management.
Free Credit Score
To access your FICO score and Experian credit report, you can sign up for a free account that provides:
- Access to your Experian credit report, with monthly updates.
- A FICO Score 8 credit score based on that Experian credit report
- Credit alerts that notify you when that FICO 8 credit score changes, when a new loan or credit card account is added to your credit report, and when Experian receives a request to check credit from a lender or other authorized party (such as a landlord, auto insurance company, or utility company).
- A finance tracker you can connect to your checking and savings accounts and use to track spending and savings.
- Referral tools that present offers for credit cards, car insurance policies, and various loans (student loans, personal loans, home improvement loans) that you may qualify for based on your FICO Score.
- A new service in which you can have Experian negotiate with service providers such as cell phone and cable companies to lower your bills; if Experian succeeds, you pay a one-time fee of 40% of what they save you over a year; if there are no savings, you pay nothing.
Experian Creditworks Premium
Upgrading to a paid Experian Creditworks℠ Premium subscription gets you more services, including:
- Credit reports from all three national bureaus (Equifax and TransUnion as well as Experian)
- Access to a simulator that can help you test the score impacts of different credit decisions
- Access to a planning tool that can help you improve your credit scores.
A second paid subscription service, Experian IdentityWorks™, provides an array of services that can help prevent credit fraud and identity theft. It offers two levels of coverage, IdentityWorks™ Plus, and IdentityWorks™ Premium, in three tiers each—for one adult, for an adult and up to 10 children, and for two adults and up to 10 children.
Both levels of IdentityWorks™ provide an array of services that can help prevent credit fraud and identity theft, including:
- Monthly monitoring of the Internet (including the hidden “Dark Web” used for many criminal transactions) for the appearance of your personal information, including Social Security numbers.
- The ability to lock (and unlock) your Experian credit reports via a web page or smartphone app to prevent access to your credit information if you suspect criminal activity.
- Alerts to activity on your credit reports, updated daily, including requests for credit checks and creation of new accounts.
IdentityWorks™ Premium offers several services over and above those available in IdentityWorks™ Plus. But the biggest difference between the service levels is that Premium monitors credit activity on your credit reports at all three national credit bureaus (Experian, Equifax, and TransUnion), while Plus monitors only your Experian credit file. You can compare the differences between the plans on the Experian website.
Experian Boost™ is an additional free service that can help improve FICO Scores based on Experian credit data. When you enroll in Experian Boost, you can link your bank account and share your history of recurring electronic payments to companies such as utilities, cell phone providers, and certain streaming-media services. Experian incorporates that information into your credit report so your on-time payments can potentially bring improvement to FICO Scores based on Experian data.
The free Experian smartphone app lets you check your scores and receive credit alerts in the form of app notifications.
Credit Karma is a free subscription service that offers a variety of personal finance and credit management tools, as well as referrals to a variety of credit offers it identifies based on your credit score.
In contrast to Experian, Credit Karma provides credit scores calculated using the VantageScore system rather than the FICO Score. It provides two scores, one based on credit bureau data from Equifax and the other based on data from TransUnion.
Credit Karma offers even more interactive tools and resources than Experian to help you improve your credit scores and meet financial goals. Along with educational articles, it offers several loan and mortgage calculators.
Like Experian, Credit Karma can also match you to credit offers you’re likely to qualify for based on your credit scores, but in addition to the personal loans, credit cards, and auto insurance offers available with Experian’s free service, it also provides referrals to student-loan providers, auto lenders and mortgage issuers.
Credit Karma offers a free smartphone app you can use to check your scores and monitor your credit score-improvement progress. It provides alerts you can receive as app notifications, text messages, or emails when your credit scores change.
Why Should You Monitor Your Credit Score?
Your credit score is a snapshot of your credit health, based on the contents of your credit report at one of the three national credit bureaus, Experian, Equifax, or TransUnion.
One good reason to monitor your credit scores is so you’ll have an idea of what others will see when they check your credit. Access to your credit scores is limited by law to a small number of users, including:
- Lenders who may check your credit scores when deciding whether they’ll do business with you when setting interest rates on loans and credit cards.
- Landlords who may use credit scores when screening potential tenants and determine how much to require for security deposits.
- Auto insurers, which may utilize specialized versions of your credit scores when setting your insurance premiums.
Another reason to check your credit reports and scores regularly is to help detect unauthorized activity. Sudden, severe changes in credit score and the appearance on your credit report of unfamiliar accounts or credit-check requests (listed as inquiries on credit reports) can indicate that criminals are using your personal information to seek loans or credit card accounts. The free credit-monitoring services allow you to see adverse reports that can indicate missed payments or fraud. While you can obtain a free annual credit report from all three major credit reporting bureaus (note that, through April 20, 2022, credit reports are available for free weekly through AnnualCreditReport.com), it is a good idea to use credit monitoring services like Experian year-round to keep your credit in good standing and prevent fraud. Credit acceptance for loans and credit lines is largely contingent upon a good credit score, so it is essential to monitor your credit score if you plan to apply for financing.
Experian vs. Credit Karma: The Differences
While they offer similar services, Experian and Credit Karma have some distinct differences that make them useful for individuals in different circumstances. Let’s check the differences:
- Services: Credit Karma offers one service, while Experian has different services to help you depending on your credit needs. In this case, Credit Karma may be limiting in terms of what services you want to use. For example, if you are looking into simply monitoring your credit history, both offer free monitoring. However, if you’re going to do more with your credit, like actively improving it, Experian may be a better solution as you can use Experian Boost for free.
- Pricing: Both Credit Karma and Experian offer a 100% free plan to get your credit score and reports for free. However, Experian also gives you an extra free feature to help you automatically improve your credit scores (Experian Boost) that Credit Karma does not offer. Experian offers a paid membership to access other higher-level services, such as identity theft protection with insurance. Therefore, if you want more flexibility about the services you use and pay for, Experian may be a better solution for you.
- Credit Cards and Loan Offers: Both Credit Karma and Experian will direct you to credit card offers that can help boost your credit and save you money. You will find credit cards from most major credit card providers, including Petal, Citi or Discover. Both services suggest offers of cards that will likely approve your application based on your credit score.
- Tools to Improve Your Credit Scores: Both Experian and Credit Karma offer tools to analyze and understand your credit report, as well as suggestions for improvement. However, Experian has taken this one step further, offering a free service called Experian Boost. You can link your bank accounts to your account, and they will add positive payments to your credit history, potentially boosting your credit scores without much work on your end. So if you want to improve your credit scores, aside from just monitoring it, Experian may be a better solution for you.
- FICO vs. VantageScores: While Experian provides a FICO Score, Credit Karma uses VantageScore. Depending on the lender you use, you may need one or the other. FICO is the most common one, and through Experian,Three-bureau reports and scores are available with a paid membership.
- Experian Boost: Experian’s free services include Experian Boost, which gives members the option of adding their utility and phone payments to their credit reporting. The goal is to improve your credit score immediately by adding a good payment history. This can be especially useful if you need a quick score boost for a financing application and individuals who struggle with less than stellar credit history.
Experian vs. Credit Karma: Which Is Better for You?
If your interest in a free credit-scoring service is occasional checks on your scores and the general direction they’re taking, either Experian or Credit Karma will fit the bill.
Credit Karma’s free services offer a slight edge in terms of the range of tools and on offer, so that might be the better choice if you’re interested in educating yourself about credit and credit improvement.
On the other hand, If you want to monitor your credit to avoid credit fraud, tapping into Experian’s paid services can deliver comprehensive credit-security measures Credit Karma doesn’t have, including one-stop monitoring of your credit scores and reports from all three national credit bureaus. Experian’s optional bill-reduction service and the Experian Boost program are also unlike any services available through Credit Karma.
Consider Both Experian and Credit Karma
The best option If you’re focused on improving your score, or if you’re shopping for new credit cards, loans, or car insurance, you might be subscribing to the free services from both Experian and Credit Karma.
Subscribing to both gives you access to your credit reports from all three credit bureaus: Experian draws from Experian data, of course, and Credit Karma covers TransUnion and Equifax. Keeping tabs on all three credit reports can help you detect suspicious activity as quickly as possible. Using both services’ credit-monitoring options can even proactively tell you to check what’s going on: You’ll get a notification if, for instance, any of the bureaus receive a credit inquiry about you; if you haven’t applied for new credit (or a tenant screening, car-insurance policy, etc.), that could be something worth investigating.
Signing up for free subscriptions at Experian and Credit Karma means you can use both when shopping for new credit cards, loans, or auto coverage. Offers from the two companies will likely differ some, giving you a greater range of options than either service individually. Still, since all are derived from your credit scores, there’s a good chance you’ll qualify if you decide to apply for any of them.
Comparing Scores from Experian and Credit Karma
If you decide to enroll in both services, keep in mind that the FICO Score based on Experian data is calculated differently than the VantageScores based on TransUnion and Equifax data you’ll get from Credit Karma. Your FICO Score may differ from your VantageScores because of those different calculation methods.
When working on building your credit, it’s helpful to bear in mind that, while the FICO Score and VantageScore may weigh them differently, both scoring systems look into similar good credit habits, and focusing on those behaviors will tend to increase all your credit scores. These “best practices” include:
- Make timely monthly payments. Payment history is responsible for about 35% of your FICO Score, and VantageScore considers it “moderately influential.”
- Maintain moderate credit card balances. Balances that exceed about 30% of a card’s borrowing limit can hurt your credit scores, and people with the highest scores keep their balances at or below about 10% of borrowing limits.
- Build a track record of responsible credit use. Lenders value borrowers with experience managing credit, so a longer history of wise credit habits will tend to increase your credit scores. There’s nothing you can do to rush this process, so if you’re relatively new to credit, you’ll have to be patient—and avoid missing payments or making other missteps. Age of accounts contributes about 15% of your FICO Score, while VantageScore considers it “less influential.”
- Gain experience with multiple forms of credit. Lenders appreciate borrowers who can handle more than one loan or credit card account simultaneously and who can manage a variety. Credit mix, or account diversity, is responsible for about 10% of your FICO Score, but VantageScore considers it “highly influential.”
- Avoid frequent or unnecessary acquisition of credit. Each time a hard inquiry—or credit check related to a new credit application—appears on your credit report, it tends to cause a small drop in your credit scores. Your score typically recovers within a few months as long as you don’t miss any debt payments, but too many new loans or credit card accounts in a short period of time can create a cumulative drag in your credit score. New credit inquiries are a component of a category that constitutes about 10% of your FICO Score, and VantageScore treats them as “less influential.”
Experian and Credit Karma’s free services both have much to offer if you’d like to track your credit scores, work toward improving them over time, and help you shop for credit offers you’ll likely qualify for based on your credit scores. Experian and Credit Karma make money if you apply for those offers, but you’re under no obligation to do so, and you can learn an awful lot for free from both services.