A recent IBISWorld research saw the revenues of US consumer credit scoring agencies grow 5% annually over the period 2009 through 2014 to be worth $11 billion this year. The market is dominated by the three key credit score providers – Equifax, Experian, and TransUnion. Today, US consumers have nearly $13 trillion in outstanding debt and there is a rising wave of online consumer financial services providers flooding the market to help consumers manage this debt.
Credit Karma’s Offerings
San Francisco-based Credit Karma is one such company that is providing consumers a way to track their credit score and benefit from it. Credit Karma was founded in 2007 by Kenneth Lin to offer consumers deeper insight into their credit score. Their tool helps consumers understand what goes into the making of their credit report and provides additional services to help them manage their credit score better.
Unlike other credit rating agencies such as Equifax, which charges consumers for monitoring their credit scores, Credit Karma operates on a free model. Consumers can subscribe to their site for free and can access four of their credit scores offered by TransUnion’s New Account Score, VantageScore, Auto Insurance Risk Score, and Home Insurance Risk Score for free. Consumers can also benefit from additional services that help consumers manage their debt and financial health such as the ability to track credit scores and simulate credit scores based on interactive models. They can also set up email alerts to be notified of credit score changes.
They are also expanding their offerings and are working on partnering with financial institutions to offer a recommendation and origination service that will help consumers manage their debt. Ultimately, Credit Karma wants to become the “Kayak for the financial services industry” by being able to offer to the consumers a one stop search engine best suited for their financial analysis needs.
Credit Karma’s Financials
Credit Karma operates on an advertising-based revenue model. Based on the credit score, Credit Karma’s partners deliver exclusive offers to these consumers. As of March this year, Credit Karma had a user base of over 21 million subscribers who accounted for $1.2 trillion of US consumer debt. They have seen revenues, subscriber base and head count at the organization triple during 2013. While they do not disclose financials, in a recent interview, their founder suggested that they were on track to deliver revenues of more than $200 million, but profitability is still uncertain as they are spending money on sales and marketing efforts.
The company remains venture funded and has so far raised four rounds to fund $118.5 million from investors including Google Capital, Tiger Global Management, Susquehanna Growth Equity, Ribbit Capital, 500 Startups, Susquehanna Growth Equity, Angel LLC, QED Investors, SV Angel, Founders Fund, and Felicis Ventures. Their latest round of funding was held in March this year when they raised $85 million in a round led by Google Capital at an undisclosed valuation. The company plans to use these funds to continue hiring staff to manage growth.