Credit Karma Has Raised $175M on a Valuation of $3.5B(techcrunch.com)
techcrunch.com
Credit Karma Has Raised $175M on a Valuation of $3.5B
http://techcrunch.com/2015/06/23/credit-karma-has-raised-175m-on-a-valuation-of-3-5b/
96 comments
They have a direct relationship with Equifax and TransUnion, two of the major credit bureaus in the US. That is where the identity data comes from.
The first phase is to verify your identity by matching it against an authoritative data set, likely a credit file at either Equifax or TransUnion in this case. Once that data is matched, a set of questions from that data is generated. Your identity was likely matched against someone with similar identity information, hence the odd questions.
Do you a similar name to other people in your household? The good news is that the question set verifies you against the information it fetched. If you are not, you should fail the question set.
We at BlockScore provide an identity verification and question set service. Properly tuning the service to match the right person takes a lot of secret sauce because there is a lot of imperfect data. Thankfully we have this working well.
The first phase is to verify your identity by matching it against an authoritative data set, likely a credit file at either Equifax or TransUnion in this case. Once that data is matched, a set of questions from that data is generated. Your identity was likely matched against someone with similar identity information, hence the odd questions.
Do you a similar name to other people in your household? The good news is that the question set verifies you against the information it fetched. If you are not, you should fail the question set.
We at BlockScore provide an identity verification and question set service. Properly tuning the service to match the right person takes a lot of secret sauce because there is a lot of imperfect data. Thankfully we have this working well.
I didn't have problems signing up but according to them I have tax liens from before I was even born. I went to Experian directly and they don't exist (nor have I ever heard/seen such). Maybe they are trying to be cute with data and supplement it?
If you don't have enough info in your credit report to ask enough questions of course they have to supplement it. you would presumably still know the answers since you'd know if you have a loan or not.
I signed up for CreditKarma too long ago to remember the process, but this is pretty standard for credit reporting services. I know Equifax, MyFICO, and the free annual government site do the same. In my experience the "You recently opened an auto loan..." questions are almost always answered with "none of the above".
Yeah, I've signed up for Equifax and MyFICO as well, and didn't have a problem with it. Maybe I just got "lucky" and stumbled on a bunch of really bizarre ones this time ;)
I believe there is a third party service that provides this type of verification. I don't know much about it by I've seen it many times (comes with applying for mortgages and other types of loans). I have gotten questions like "which of these streets have you lived on?" and "which of these banks issued you a credit card?" as well as "Which of these people do you know?" So I don't think it's necessarily Credit Karma's fault for asking you weird questions.
I did some Googling, and the worst thing I can find anyone say about Credit Karma is that they failed to correctly utilise HTTPS/SSL through 2013[0]. But aside from that nobody has much bad to say about them.
PS - I cannot actually get a credit score as they cannot generate security questions for me because they don't have enough information about me or similar. Plus a lot of places bounce my SSN as the SSA started generating them a different way in 2011, and tons of systems haven't updated to the new format yet (as only post-2011 immigrants and babies have those SSNs).
[0] https://www.ftc.gov/system/files/documents/cases/140328credi...
PS - I cannot actually get a credit score as they cannot generate security questions for me because they don't have enough information about me or similar. Plus a lot of places bounce my SSN as the SSA started generating them a different way in 2011, and tons of systems haven't updated to the new format yet (as only post-2011 immigrants and babies have those SSNs).
[0] https://www.ftc.gov/system/files/documents/cases/140328credi...
I guess you have no credit cards or loans under your name right?
I cannot. No credit score.
Good for you - keep it that way. Contrary to popular belief you can still get a mortgage (it's called manual underwriting, and a copy of a written budget plus proof that you have no other debt makes you a desirable borrower) and anything else you'd need a credit score for is probably better off being paid for with cash.
>anything else you'd need a credit score for is probably better off being paid for with cash.
Your credit score has become a stand-in for a whole bunch of non-credit related things. You get lower insurance rates with a higher credit score and vis-versa. Every landlord nowadays requires a minimum credit score and employers will check your credit report as well. For the last item not having credit won't be a problem, however, they are just looking for negative items. Utility companies (cell phones, internet, electricity) usually require a down payment for those without a credit history (or those not wishing to authorize a credit check). Your credit is pulled when you get a bank account (don't know the consequences of not having a credit report for that one though - if you don't show up they may make you prove your identity more?)
Your credit score has become a stand-in for a whole bunch of non-credit related things. You get lower insurance rates with a higher credit score and vis-versa. Every landlord nowadays requires a minimum credit score and employers will check your credit report as well. For the last item not having credit won't be a problem, however, they are just looking for negative items. Utility companies (cell phones, internet, electricity) usually require a down payment for those without a credit history (or those not wishing to authorize a credit check). Your credit is pulled when you get a bank account (don't know the consequences of not having a credit report for that one though - if you don't show up they may make you prove your identity more?)
> Every landlord nowadays requires a minimum credit score
Not accurate, though it may be true for a typical apartment complex.
Not accurate, though it may be true for a typical apartment complex.
Depends on the region, of course, I should have put that as a disclaimer. Where I live you absolutely can't get an apartment from anyone unless you submit to a credit/background check (and pay for it yourself of course). This wasn't the case a few years ago but that's how it is now.
Perhaps you should clarify apartment landlords, since many houses are owned by individual real estate investors who lease out the properties, and who have a different set of requirements when it comes to single-family dwellings.
this is the best advice ever. Staying debt free is critical to amassing wealth. I wish I would have received this advice sooner in life.
Worst advice ever. A credit score is not just for getting a mortgage or a car loan. When I lived in New York, I had to have an acceptable credit score to get an apartment in most places.
Not to mention, when I signed up for a Verizon account under an LLC that I have with my dad, we were forced to put down an $800 per phone deposit because the company had no credit history. Same with utilities.
When I was starting a company, the bank wanted to check my credit score to decide whether I was going to get a checking account or not. This has happened twice, once with my previous company and a merchant account for credit cards.
I haven't ever personally, but I've also talked to people who check credit scores as part of employment evaluation.
Also, having a higher credit score gets you a better interest rate if you do need a loan, which can be worth a whole lot of money.
You have every right to make the choice to live without credit, but I would have a hard time arguing that it's the smart play.
Not to mention, when I signed up for a Verizon account under an LLC that I have with my dad, we were forced to put down an $800 per phone deposit because the company had no credit history. Same with utilities.
When I was starting a company, the bank wanted to check my credit score to decide whether I was going to get a checking account or not. This has happened twice, once with my previous company and a merchant account for credit cards.
I haven't ever personally, but I've also talked to people who check credit scores as part of employment evaluation.
Also, having a higher credit score gets you a better interest rate if you do need a loan, which can be worth a whole lot of money.
You have every right to make the choice to live without credit, but I would have a hard time arguing that it's the smart play.
having done all of those, it was without a credit score.
Actually building and attaining good credit is a valuable asset in its own right. Building wealth is more than refusing to play the game and putting money in a shoebox.
Be disciplined and use various financial vehicles for your advantage.
No credit == Bad credit.
This equates to you being seen as more risky which equals you paying more interest for any loan in the future. Having good credit also afford you more opportunities.
I only know b/c I avoided holding a CC and loans for years until it started to hurt. Now I use them with discipline and for my advantage and am 810+
Be disciplined and use various financial vehicles for your advantage.
No credit == Bad credit.
This equates to you being seen as more risky which equals you paying more interest for any loan in the future. Having good credit also afford you more opportunities.
I only know b/c I avoided holding a CC and loans for years until it started to hurt. Now I use them with discipline and for my advantage and am 810+
Like I said, I'm not interested in taking loans, regardless of interest rate, as the risk associated with such aren't worth it for me. I've seen what debt does. Its like a drug. Look at all of the comments and they all sound like drug abusers. "Use it responsibly" or "I can handle it". You are welcome to borrow, I'm taking my ball and going home. I won't ever borrow again. If I can't pay cash, I can't afford it.
There is nothing bad or irresponsible about using some credit responsibility.
I moved here early this year from another country and had zero credit score but a rather high salary.
Went to HSBC with proof of salary and they happily gave me a credit card with a decent limit. Got my credit score up rather fast.
If you're in a similar situation it might be worth looking into.
Went to HSBC with proof of salary and they happily gave me a credit card with a decent limit. Got my credit score up rather fast.
If you're in a similar situation it might be worth looking into.
When I had no credit (and no salary, I was in school) I applied for a Target credit card on a whim. They accepted me but gave me a $250 limit.
You can get a pre-paid one
Secured credit card.
I'd prefer not to pay $15/year (plus hassle) to improve my credit score. I'm sure the problem will solve itself eventually.
Probably not the best stance to take. You can build quality credit much faster than you might think just starting with a secured credit card. It is certainly worth paying ~$15 for.
You can get no fee secured credit cards. The problem is usually the low limit with respect to the security deposit.
Personally, I wouldn't wait, because credit can take a long time to build (just getting an unsecured card will take a year).
You may also be able to get a card from a bank in your country of origin, some have branches or affiliates in the US.
Personally, I wouldn't wait, because credit can take a long time to build (just getting an unsecured card will take a year).
You may also be able to get a card from a bank in your country of origin, some have branches or affiliates in the US.
I'm not a financial advisor, but you might think twice about this. Establishing a good credit history could save you a lot of money at some point in the future. It's a hassle now and doesn't seem to matter in the short term, but 10 years from now if you wanted to get a mortgage you wouldn't be able to go back in time to now to start establishing a good history and it might cost you a lot in interest.
It will not solve itself eventually. I have a friend who immigrated to the US and went this route, and he basically lost a few years he could have used to build a credit history, which hurt him ten years later when he wanted to buy a house.
So when I immigrated to the US, I started with a secured credit card as fast as possible. Mine was free to have, and you could set it up so it was paid automatically, in full, from your checking account every month. That way you just need to charge something to it each month, and you'll slowly build your history.
So when I immigrated to the US, I started with a secured credit card as fast as possible. Mine was free to have, and you could set it up so it was paid automatically, in full, from your checking account every month. That way you just need to charge something to it each month, and you'll slowly build your history.
> you just need to charge something to it each month
You don't even have to do that. You can leave it idle for months if you want. The only thing you have to watch out for is the issuer canceling inactive cards. Having an idle credit card shows you aren't maxing out your cards - you have credit available that you are not using. Length of credit history is also a factor in your score.
You don't even have to do that. You can leave it idle for months if you want. The only thing you have to watch out for is the issuer canceling inactive cards. Having an idle credit card shows you aren't maxing out your cards - you have credit available that you are not using. Length of credit history is also a factor in your score.
Does it count towards making payments on time though?
Why would you need to pay $15/year for a credit card? Most have no monthly fees - you can surely find a free one. If you pay the balance off in full every month it costs you $0. The big issue with having zero credit history is that you risk not being able to be approved for an apartment.
This. Bank of America and Capital One both have secured cards that eventually convert into unsecured.
Not sure if you have done this on purpose but if there is any chance you actually want to build credit and be tracked by the credit agencies with a credit score, then the first step is to get a "Secured credit card" which means that a bank will give you a credit card but you will have to deposit like $500 etc as collateral/security. Then start using this credit card to pay for your expenses as much as possible while paying the statement balance in full every month. Do this for a few months and you will start building credit.
Sorry to be the annoying European here, but the the American concept of building credit is really strange to me. Instead of just buying things with money I have, I am supposed to use the money as security for loans I don't need. That somehow proves that I am financially responsible in general.
I hear you. But you know as they say "When in rome...". The thing with American financial system is that your credit score/history is of significant importance if you want to part of the usual society. For example, to get a loan, they want to check your credit as it is a standard way of ensuring that you are an ok candidate. Does that work all the time ? Of course not. The 2008 financial crisis is a solid proof.
But the thing is that if not this, then what ? Not everyone can buy a house with cash. Ok, so then don't buy it unless you can pay all cash? Fine. Try renting an apartment without credit. Most of them will not talk to you. Now, What about employment with certain financially sensitive companies ? They check your credit..yes they do. It is a requirement to get an offer at those type of companies. Want to get car insurance ? They may check your credit history too. Of course you can choose not to drive a car. Did I forget to mention cell phone companies ? Yes, here in the US, most people get a post paid plan which involves checking credit. Could you use prepaid ? Sure you can but it is not very lucrative as you cannot get Iphones for $0.99 with prepaid plans.
So the point is that it is technically possible to not have any credit and get by specially if you have a lot of cash, but it is extremely difficult to get a lot of things done without credit in the US.
But the thing is that if not this, then what ? Not everyone can buy a house with cash. Ok, so then don't buy it unless you can pay all cash? Fine. Try renting an apartment without credit. Most of them will not talk to you. Now, What about employment with certain financially sensitive companies ? They check your credit..yes they do. It is a requirement to get an offer at those type of companies. Want to get car insurance ? They may check your credit history too. Of course you can choose not to drive a car. Did I forget to mention cell phone companies ? Yes, here in the US, most people get a post paid plan which involves checking credit. Could you use prepaid ? Sure you can but it is not very lucrative as you cannot get Iphones for $0.99 with prepaid plans.
So the point is that it is technically possible to not have any credit and get by specially if you have a lot of cash, but it is extremely difficult to get a lot of things done without credit in the US.
As a Credit Karma user, this sounds like bad news. I was happy with the service I was getting at the price I was getting (free but with the knowledge they were probably selling my info to their partners). But I'm now worried what exactly they are going to have to do to justify $3.5 billion. Can you really earn that kind of valuation peddling new credit cards and refinanced loans?
> Can you really earn that kind of valuation peddling new credit cards and refinanced loans?
I'd imagine yes. Those sorts of offers are immensely lucrative.
I'd imagine yes. Those sorts of offers are immensely lucrative.
>Can you really earn that kind of valuation peddling new credit cards and refinanced loans?
I think so. That's a huge market.
Honestly, I think it is a win-win. I don't have any loans but if I were to have a big loan like a mortgage I would welcome offers from leaders who could save me a significant amount of money. Many people I know have refinanced their mortgages at some point in the life of the loan.
I think so. That's a huge market.
Honestly, I think it is a win-win. I don't have any loans but if I were to have a big loan like a mortgage I would welcome offers from leaders who could save me a significant amount of money. Many people I know have refinanced their mortgages at some point in the life of the loan.
I'm concerned too. I jumped ship from Mint when Intuit bought them out. CK might do it right but...there is a very lucrative market for refinancing, I'm very concerned they will make a poor choice for it's users.
Did you leave Mint because of specific changes that Intuit did, or was it proactive based on what you expected Intuit to do? I use Mint and haven't noticed any changes after the Intuit purchase.
Agreed - that was actually the problem, as they left Mint frozen in time as it was when it was created (2008? 2010?). They've made some recent updates but constant improvements would be welcomed.
I had the same thought as soon as I read the HN title. Even NerdWallet is supposedly valued around $1B. I guess we need to get used to the new normal of billions of dollar of valuations.
Quality service, I really like CK -- but seems like a very high valuation?
Just another example of Stupid High Valuation (SHiV) in the Valley Echo-Chamber
People keep saying we're in a bubble and yet seven years later, since 2008, I can only think of three major VC implosions off the top of my head: fab.com, zynga, and groupon. Fab was a train-wreck that anyone with a pulse could have seen coming. Zynga... way too dependent on Facebook and a fad. Groupon is the better of the three, only seeing its valuation fall from $30 billion to just $4 billion - but still well over $1 billion. These valuations, as lofty as they seem, are not falling. It's kinda weird, but not surprising considering how much wealth is circulating in the silicon valley. Then you look at twitter and it held up very well after its IPO despite its very high valuation.
The problem with using the past to predict the future is that there are often subtleties that can produce wildly diverging outcomes. These app & web 2.0 companies seem to be doing something right to avoid the valuation chopping block that afflicted so many of the earlier internet startups. web 2.0 companies retain value better than a CD lol
One reason why app companies, as opposed to sites that that sell physical stuff, are doing so well is that they have better profit margins and can use network effects for added growth.
The problem with using the past to predict the future is that there are often subtleties that can produce wildly diverging outcomes. These app & web 2.0 companies seem to be doing something right to avoid the valuation chopping block that afflicted so many of the earlier internet startups. web 2.0 companies retain value better than a CD lol
One reason why app companies, as opposed to sites that that sell physical stuff, are doing so well is that they have better profit margins and can use network effects for added growth.
Trouble is that whilst the VC implosions are rare, so too are the >$1bn exits over that same period. And Twitter, down 20% in a market which has moved steadily in the opposite direction, is not exactly a poster child for holding prices...
From the 590 companies identified by CB Insights in December 2013 as being the "cream of the crop" of VC funded, IPO-ready firms, a total of just $33bn - less than one Uber - was made from actual exits (IPOs and M&A).[1] And 2014 was the best year for tech IPOs since 2000...
[1]OK, so its not a complete list, especially as the figure presumably excludes Alibaba and Whatsapp. And the 67 companies on the list that opted to exit in 2014 rather than hold out a little longer managed a mean exit valuation in the region of $0.5bn, which isn't peanuts. But it does put into perspective that this hyped IPO would be a very significant percentage of the annual revenues realised collectively for tech exits in a good year, which is probably a better metric than the number of unicorn valuations floating around.
From the 590 companies identified by CB Insights in December 2013 as being the "cream of the crop" of VC funded, IPO-ready firms, a total of just $33bn - less than one Uber - was made from actual exits (IPOs and M&A).[1] And 2014 was the best year for tech IPOs since 2000...
[1]OK, so its not a complete list, especially as the figure presumably excludes Alibaba and Whatsapp. And the 67 companies on the list that opted to exit in 2014 rather than hold out a little longer managed a mean exit valuation in the region of $0.5bn, which isn't peanuts. But it does put into perspective that this hyped IPO would be a very significant percentage of the annual revenues realised collectively for tech exits in a good year, which is probably a better metric than the number of unicorn valuations floating around.
Tech IPO is a bad metric though because ever since the passage of Sarbanes-Oxley, no one in tech wants to go public, because the requirements for a public company are stupid, costly and time-consuming.
It's nice to bash SarbOx, but really that's not the problem.
The thing that is causing these absurd valuations is that Yagoopplezonsoft are choking out the pipeline too early for the big plays.
Most startups cash at less than $50 million, and LOTS of companies are sitting on huge cash reserves that can buy them there now. To the big companies, that's a big win if they pick up 10+ engineers and something possibly worth money. To the startup, that's also a huge win if you kept your headcount down. So, who's going to oppose the cashout?
After Yagoopplezonsoft vacuums up anything even remotely competitive in their space at the Series A point combined with the fact that VC's hate doing Series A funding because "Waaaaaaah. It's riiiisky."--the problems of getting your $5-10 million funding are well documented here--what's left?
So, the problem is that then number of companies that are willing to rack up a huge valuation is small. Once those companies actually get to the huge valuation, sure, there are a ton of people waiting for them throwing money at them.
The question you have to ask as a founder or employee single digit is, do I want to take the risk to go there?
If your founding bunch are remotely rational, the answer is "Not on your life, take the cash."
So, the only companies that would be willing to go to high valuations are high headcount, resource intensive companies that build real products--like Atheros. And VC's LOATHE those kinds of companies--so Atheros needed to get bought anyway.
The problem is of the VC's own making. Since they won't fund at Series A levels, they have so little to flog at Series C levels that the valuations go astronomical when one appears.
The thing that is causing these absurd valuations is that Yagoopplezonsoft are choking out the pipeline too early for the big plays.
Most startups cash at less than $50 million, and LOTS of companies are sitting on huge cash reserves that can buy them there now. To the big companies, that's a big win if they pick up 10+ engineers and something possibly worth money. To the startup, that's also a huge win if you kept your headcount down. So, who's going to oppose the cashout?
After Yagoopplezonsoft vacuums up anything even remotely competitive in their space at the Series A point combined with the fact that VC's hate doing Series A funding because "Waaaaaaah. It's riiiisky."--the problems of getting your $5-10 million funding are well documented here--what's left?
So, the problem is that then number of companies that are willing to rack up a huge valuation is small. Once those companies actually get to the huge valuation, sure, there are a ton of people waiting for them throwing money at them.
The question you have to ask as a founder or employee single digit is, do I want to take the risk to go there?
If your founding bunch are remotely rational, the answer is "Not on your life, take the cash."
So, the only companies that would be willing to go to high valuations are high headcount, resource intensive companies that build real products--like Atheros. And VC's LOATHE those kinds of companies--so Atheros needed to get bought anyway.
The problem is of the VC's own making. Since they won't fund at Series A levels, they have so little to flog at Series C levels that the valuations go astronomical when one appears.
I suspect if you removed Sarbanes-Oxley the effect would be marginal: The primary reason to avoid going public is to be able to operate independently of the pressure from public investors and the media.
Honestly, I'm surprised Google and Apple haven't started massive stock buyback programs with the cash they're throwing up so they're no longer beholden to shareholders.
Going for 7 years doesn't prove it's not a bubble, especially when many of the externalities people have suggested are causing a bubble have not changed (low interest rates, for instance).
It's more like 10 years if you include Facebook - that's an entire business cycle, or about the same duration as the 1990-2000 internet boom. But in siding with Andreessen and others, I think this one has further to run.
But I am pessimistic about the hardware unicorns (fitbit, skullcandy, jawbone) as opposed to the app/website ones, so It's not like I am emphatically bullish about everything. http://greyenlightenment.com/billion-dollar-startup-club-pic...
But I am pessimistic about the hardware unicorns (fitbit, skullcandy, jawbone) as opposed to the app/website ones, so It's not like I am emphatically bullish about everything. http://greyenlightenment.com/billion-dollar-startup-club-pic...
Its not a business cycle, really. The fed last week said the stock market will crash if they put interest rates much above zero. That is the definition of a bubble. A bubble is a mis-pricing of risk based on non-market force (irrational or otherwise) that will revert to equilibrium when given the chance.
Is your argument that we aren't in a bubble really "it hasn't popped yet"?
Look at companies like Uber, Whats-app, Dropbox, Snapchat, Instagram...these aren't flashes in the pan, but are ecosystems harnessing hundreds of millions of people. These companies are creating entire infrastructures and industries. Facebook, Twitter and Instagram pretty created the entire mobile advertising market. Uber is revolutionizing transportation.
Not long ago did MSN, Y! Chat, AIM boast multi-million people network. I wonder what makes WhatsApp, and Instagram different? One product businesses are also one trick ponies. WhatsApp has real ubiquity about them... (Replacing SMS), but then, I'm not so sure about Instagram and Twitter. Sure the celebs pull in a lot of users, but if the past is any indicator, social networks can come down in a heap...
The question isn't whether the companies create value, it's whether the value matches the valuation.
Why not? It's the same one that's trotted out every time.
I use the service because it's more convenient than going to each reporting company for my reports. I don't necessarily trust the algo for my score, but I'm sure it's close enough.
Other than that, the credit card/loan offers available on the site are targeted at the lowest common denominator with ridiculous APRs and bad reviews. I get better offers in my postal mail daily.
Other than that, the credit card/loan offers available on the site are targeted at the lowest common denominator with ridiculous APRs and bad reviews. I get better offers in my postal mail daily.
From the article:
> “With more than 40 million members, we are excited by Credit Karma’s widespread adoption by people all over the country, giving us insight into $2.3 trillion of America’s household debt. This massive data enables us to deliver top quality insights for everyone looking to improve their personal finances.”
Does CK make more money off of people with large amounts of debt? Are they chasing this demographic? I suppose that demographic might be more susceptible to following through with refinance and credit card offers than people with little/no debt.
As a CK user I am not too worried. It's been clear to me that my information is shared with lenders/creditors, and I know I have enough willpower to only accept those offers if it is fiscally responsible.
> “With more than 40 million members, we are excited by Credit Karma’s widespread adoption by people all over the country, giving us insight into $2.3 trillion of America’s household debt. This massive data enables us to deliver top quality insights for everyone looking to improve their personal finances.”
Does CK make more money off of people with large amounts of debt? Are they chasing this demographic? I suppose that demographic might be more susceptible to following through with refinance and credit card offers than people with little/no debt.
As a CK user I am not too worried. It's been clear to me that my information is shared with lenders/creditors, and I know I have enough willpower to only accept those offers if it is fiscally responsible.
> As a CK user I am not too worried. It's been clear to me that my information is shared with lenders/creditors
Are they sharing any information that creditors don't already have access to, or which banks and creditors are already allowed to share with others without your consent?[0]
[0] State and federal laws allow you to opt out of some forms of sharing, but not all.
Are they sharing any information that creditors don't already have access to, or which banks and creditors are already allowed to share with others without your consent?[0]
[0] State and federal laws allow you to opt out of some forms of sharing, but not all.
Credit Karma would be a lot more useful if they gave you your actual Fico score. The score they give you, a so-called Fako, is for entertainment purposes only. I've never heard of a lender that actually uses VantageScore and its ilk in lending decisions.
As I understand, there is no such thing as a singular FICO score.
FWIW Recently went through a refinancing process. Two of the bureaus had slightly different score. However, both were similar to what CK had.
FWIW Recently went through a refinancing process. Two of the bureaus had slightly different score. However, both were similar to what CK had.
FICO has different models depending on what industry you're in, and then even then, they have different versions of the model. Here's some info if you want to google: FICO Classic 04, FICO Classic 08, FICO Auto 04, etc.
The crazy thing is that the scales are all different, so your Classic 04 Score could be completely different from your Classic 08 Score.
The crazy thing is that the scales are all different, so your Classic 04 Score could be completely different from your Classic 08 Score.
Does FICO even matter anymore? I remember they changed the algorithms over the past few years and I think the banks have their own scores that the public don't see. I really just use my FICO & credit report as a ballpark figure to see how banks look at me, and to check there isn't identity theft or other shenanigans going on.
Since their revenue models are pretty similar (lead gen for financial products), would it be reasonable to use Mint's per-user revenue (which had previously circulated back closer to their acquisition to be somewhere in the neighborhood of $20-$30 per user per year, I believe) to estimate Credit Karma's revenue? Putting their revenue at somewhere near 800m per year?
The revenue model is similar, but the product is obviously really different.
If anything, Credit Karma ARPU could be higher. Credit card referrals typically range from $50 to $200 dollars. Massive amounts of users come to Credit Karma through Google, sign up for a credit score/card, and then never come back.
This valuation would imply they refer at a rate of ~1-5 million cards a year I guess.
If anything, Credit Karma ARPU could be higher. Credit card referrals typically range from $50 to $200 dollars. Massive amounts of users come to Credit Karma through Google, sign up for a credit score/card, and then never come back.
This valuation would imply they refer at a rate of ~1-5 million cards a year I guess.
Profitably has never been the most pressing concern for these growth companies. Amazon went 20 years before turning a consistent profit, so it's not like there is a well-defined upper-limit where profitability is mandatory. Amazon made a trade-off choosing revenue over profitability, and that's what investors want.
Investors care less about actual profits than the ability to prove profits can be generated. Once it's demonstrated/proven that profits can be attained, investors become extremely patient. As long as potential profits keep rising, the enterprise value will rise, and investors will be happy. This is not the Warren Buffett approach, obviously, but that doesn't make it necessarily wrong or invalid. It's consistent within the theory of rational expectations.
Investors care less about actual profits than the ability to prove profits can be generated. Once it's demonstrated/proven that profits can be attained, investors become extremely patient. As long as potential profits keep rising, the enterprise value will rise, and investors will be happy. This is not the Warren Buffett approach, obviously, but that doesn't make it necessarily wrong or invalid. It's consistent within the theory of rational expectations.
It's license to print money..these card offers pay enormous commissions because they will make even more money from the applicants
I would hope their ARPU is higher...otherwise they'll never be profitable. Mint loses a ton of money. There are reasons why it makes sense for Intuit to fund that, but if CK can't be profitable, finding that kind of acquirer that will continue to operate them at a loss will be hard, especially with that massive valuation.
CK is much more than just lead referral program as Mint is. CK gets access to your FICO and credit report when you check your credit score at CK. These "qualified" leads are sold to financial services companies for several hundred dollars per lead. There is a huge demand for their leads because of the quality and amount of information you get with the lead.
Their revenue is nowhere near $800 million.
They'd have a $15-$20 billion valuation today if their revenue were that high in the private stage.
LendingClub is growing incredibly fast, is tracking toward $350 million - $400 million in annual revenue, and is valued at $6 billion. The public market is harsher on valuations than the private market as well. Were LendingClub still private, its valuation would probably be twice what its public valuation is.
Credit Karma is more likely in the $50m to $75m range on revenue.
They'd have a $15-$20 billion valuation today if their revenue were that high in the private stage.
LendingClub is growing incredibly fast, is tracking toward $350 million - $400 million in annual revenue, and is valued at $6 billion. The public market is harsher on valuations than the private market as well. Were LendingClub still private, its valuation would probably be twice what its public valuation is.
Credit Karma is more likely in the $50m to $75m range on revenue.
Similar but CK looks to expand theirs into more lucrative territory. It's the difference between referrals and commissions.
The founder did an AMA on Reddit a while ago if anyone's interested: https://www.reddit.com/r/IAmA/comments/2qq95l/i_am_the_found...
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Credit Karma's algorithms are weird. They almost exclusively give me offers for credit cards I already have. I guess you can't tell which card someone has from their report, only they have an account with that institution. Makes for some humor.
I tried to find more information about the people running the company, but can't seem to find any page on their site listing the executive team. Anyone knows why? Or perhaps I totally missed it somehow?
Kenneth Lin, who previously founded Multilytics Marketing and worked with E-Loan and Upromise, launched Credit Karma in 2007, with the website going live in February 2008. Early investors include Chris Larson, CEO of Prosper, and Mark Lefanowicz, former president of E-Loan.
https://en.wikipedia.org/wiki/Credit_Karma
https://en.wikipedia.org/wiki/Credit_Karma
Their navigation is crap, but I found it: https://www.creditkarma.com/about/pressroom
Good find :) This kind of information should definitely have more visibility on a site dealing with highly sensitive financial data.
I use Credit Karma, very much enjoy the service.
Do you have an opinion on this news?
What is their monetization strategy?
They've had a monetization strategy in place for some time: sharing user data with credit card companies, and referral fees from lenders.
You are.
they are sharing your most personal financial information with lenders and creditors; best of both worlds for them... Skin you once, flip you over, skin you again.
First, which most personal financial information are they sharing? They're only privy to credit reports now, no? A lot of these lenders could do their own soft inquiries and get the same data for a tiny fee.
Second, I'm not sure they need to share anything as they're facilitating conversions directly by evaluating your information and then suggesting the most likely convertible products (cards, loans). There's no need for a service like CreditKarma to explicitly hand that data over.
Second, I'm not sure they need to share anything as they're facilitating conversions directly by evaluating your information and then suggesting the most likely convertible products (cards, loans). There's no need for a service like CreditKarma to explicitly hand that data over.
I don't know what "need" means in this context. That is what they do - sell your data. Perhaps a different company that didn't do that could exist, and in a different sense, CK doesn't "need" to do anything, even exist. But they do exist, and do sell your data.
"Need" means they make money without selling data directly (as described above). In fact, they probably do/would make more money through direct conversions than data sales when the data is generally available anyway.
In other words, they have access to data that is available to anyone who can make a soft inquiry. That's a lot of people. It's easy and cheap.
In other words, they have access to data that is available to anyone who can make a soft inquiry. That's a lot of people. It's easy and cheap.
I mean, what else could they use the information for? I think it's obvious to everyone what the deal is.
A little panicked, I checked all of my accounts under my credit report -- everything looks good, and there aren't any suspicious new accounts... That was really bizarre.
Anyone else have similar problems signing up?