In today’s post-recession world, banks have tightened lending standards considerably in order to reduce their exposure to risky bets, and now more than ever it is imperative to build a strong credit history in order to secure bank financing when purchasing a new home, car, or other big ticket purchase.
A strong credit score can help save you thousands of dollars over the life of a loan due to more favorable interest rates and lending agreements. If you are one of the millions of Americans that have lost a job or faced a reduction in pay or working hours, and if this has caused damage to your credit score because of late or missed payments, there is good news. With dedication and effort you can work to rebuild your credit score. One of the best ways to rebuild your credit is to begin using Credit Karma.
What Is Credit Karma?
Credit Karma is a website that allows users to track their credit score and credit history on a daily basis. This is an invaluable tool whether you are seeking to repair your credit, moderately improve it, or simply maintain it. Credit Karma offers free memberships with no hidden costs. Once you sign up as a free member, you then have immediate access to the Credit Karma services. Let’s break down a few key features of the site.
Credit Score
Of course, your credit score is available. You can track this daily, but most users check it every few weeks. No longer are you restricted to checking your credit score just once a year. And, no longer do you have to pay to check your credit score. With Credit Karma you are able to consistently monitor your score.
Report Card
This feature is great. Credit Karma breaks down the key areas of your credit score and grades you with an A, B, C, D or F. It grades 6 areas that directly impact the formula for calculating your credit score. These areas include:
- Open Credit Card Utilization
- Percent of On-Time Payments
- Average Age of Open Credit Lines
- Total Accounts
- Hard Credit Inquiries
- Derogatory Remarks
Credit Karma then gives you specific feedback on how you might be able to improve and repair your credit rating by addressing weaknesses in any of these areas.
Credit Simulator
This tool is really cutting edge. The Credit Simulator allows you to undergo hypothetical credit changes, such as taking out a new loan, paying off your credit cards or small business loans, etc, and the software will simulate your new score. That way you can determine exactly what steps to take to really raise your score.
There is also a wealth of information on the website and on the Credit Karma blog, which offers further insight and education in how to practically improve and repair your credit score.
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