Millions Can Now Join Credit Karma Without a Credit Score

For almost two decades, Credit Karma has been offering tools that can help consumers manage their personal finances. But some people who would most benefit from the company’s resources haven’t always been able to access them.

That’s all about to change as the personal finance platform announced recently that consumers who don’t have a credit score are now able to join Credit Karma. 

The company said in a press release that allowing credit-invisible consumers to create accounts with Credit Karma — and begin building their credit with the platform’s guidance and tools — is a significant step toward opening up access to the financial system in the U.S.

And it’s a step that figures to help many people who want to build the foundations to achieve their financial goals. Credit Karma, which was acquired by Intuit in 2020, estimates that nearly 17 million U.S. adults either have no credit report at all or their credit file isn’t robust enough to produce a valid credit score.

“We know the need is significant,” a spokesperson at Intuit Credit Karma told us. “Our focus right now is on removing barriers for this population and giving them the tools to start building credit and get their financial footing.”

People with a thin credit profile may struggle to obtain the financing they need to purchase their first car or home.

Those without a credit score, or a particularly low one, are likely to have a much tougher time when it comes to establishing themselves financially.

A bad credit score not only prevents a consumer from getting a loan for a new car or house, but it can also make it more challenging to find a credit card company willing to issue them a card.

In a recent report, Luca Terragni, Co-Founder of credit intelligence platform Prestatech, examined the obstacles creditworthy borrowers can encounter when seeking a loan. 

Terragni said lenders and underwriters continue to turn toward manual, outdated processes when deciding whether to extend financing. And he refers to ongoing loan rejections as a crisis.

“Fundamental changes in approaches and attitudes to lending processes are necessary to alleviate this crisis,” Terragni wrote.

The First Steps Can Be the Most Difficult

The changes Credit Karma is making stand to go a long way toward helping borrowers become more attractive to lenders. The company’s efforts to help credit invisible consumers and those with a thin credit profile may be especially welcome news to members of Generation Z.

Credit Karma indicates that 46% of people in the 18-24 age group say that their lack of credit history makes them feel that they are at a financial disadvantage. And 44% of those who fall within that age range report that they aren’t even sure where to begin in building their credit. 

One way to get started along that path is to consistently pay your bills on time. Credit Karma’s Credit Spark program helps consumers transform payments they’ve made to their phone provider, utility companies, and other businesses into activities that can strengthen their credit history. 

With the solution, Credit Karma will report to TransUnion all of the applicable, on-time payments a consumer makes. This can be a powerful way to build credit as payment history is a major factor in a person’s credit score.

Credit Spark is free to use and doesn’t require a credit check. Perhaps best of all, users don’t have to worry about the impact on their score of forgetting to pay a bill by its due date as Credit Spark doesn’t report missed payments.

With Credit Builder, Credit Karma opens a savings account and line of credit, and payments toward the line of credit are reported to the three credit bureaus. This tool is an attractive option for people who are seeking to build credit and grow their savings at the same time.

Using Credit Builder may be an enticing option for those who want to give their credit score a quick shot in the arm. Credit Karma says it helps people boost their scores 17 points, on average, in only three days. 

Credit Karma’s programs may be just what borrowers who have been trying to improve their credit standing have been looking for. And now, they can access them even if they don’t have a credit score. 

People who turn to Credit Karma to improve their credit position may stick with the company even after they’ve accomplished that goal. Over time, customers of the personal finance platform gain access to personalized product recommendations and other solutions that can help them manage their money.

“For many consumers, especially Gen Z, we know their financial lives feel fragmented,” Credit Karma said in its press release. “As their needs evolve, Credit Karma adapts, providing relevant guidance, tools, and opportunities at each stage of their financial lives.”