New Credit Karma Tool Builds Credit With Rent, Utility Bills
Credit Karma, a popular financial platform, has introduced a new feature called Credit Spark that aims to help users build their credit by reporting on-time rent, utility, and phone bill payments to TransUnion, a major credit bureau. This feature is part of Intuit’s all-in-one Consumer Platform, which offers year-round control of personal finances through advanced AI technology and a network of human experts.
Credit Spark is a free service that can report up to two years of past payments, helping users establish a credit history that demonstrates their reliability to lenders. The key benefit of Credit Spark is that it only includes on-time payments, so late or missed payments will not be counted against the user. By linking their accounts and selecting which bills to report, Credit Karma takes care of the rest by automatically sending the data to TransUnion.
Similar to Experian Boost, Credit Spark focuses on sharing on-time payments to help users improve their credit scores. However, Credit Spark reports exclusively to TransUnion and affects the VantageScore model, while Experian Boost impacts FICO Scores and additional VantageScore models.
Ryan Steckler, head of product at Intuit Credit Karma, describes Credit Spark as “credit building on easy mode” that allows users to improve their credit scores using payments they are already making. This feature aligns with Credit Karma’s mission to make credit building more accessible and less intimidating for users.
Credit Spark is designed to assist younger users, renters, and first-time credit builders in establishing or strengthening their credit history. It can be particularly beneficial for individuals with lower credit ranges or thin credit files, as it can retroactively report up to two years of on-time payments without requiring a credit card.
While Credit Spark can help users boost their VantageScore, experts caution that the impact may be limited since most lenders rely on FICO scores and data from multiple credit bureaus. Additionally, sharing sensitive financial information with credit-boosting programs can pose risks, including the possibility of errors that could affect major financial decisions.
In conclusion, tools like Credit Spark can aid in building credit, but meaningful improvements require time and diligence. Users should be aware of the limitations and potential risks associated with credit-boosting programs. It is essential to understand the impact on different scoring models and exercise caution when sharing financial information.
