Credit Karma was launched five years ago to help people better understand their finances and provide them with better financial products. Its flagship product is a free credit report and monitoring service. Since its inception, 70 million users have signed on to Credit Karma, including about 50% of all U.S. millennials.
One major takeaway from Credit Karma’s operations is that users can earn a lot by giving away stuff for free. The firm announced yesterday that it closed the previous year with $500 million in revenue, rendering it profitable.
Credit Karma uses data to recommend financial services and products to clients based on their credit scores and financial goals and aspirations. On the basis of its financial models, Credit Karma then determines which cards or products are their clients likely to qualify for and on suitable terms. The company then makes a commission off the qualified referrals.
At the CBI Insights Future of Fintech event, the company’s CEO Kenneth Lin announced that the company increased its operations by 50% and topped $500 million in revenues in 2016.
Credit Karma has come a long way from its founding five years ago in San Francisco. About a year ago, the firm took in around $85 million in a Series C funding round. Ten months later, Credit Karma secured another $75 million in funding from its Series C investors: Google Capital, Tiger Global Management, and Susquehanna Growth Equity.
“We’ve been handing out free credit reports since 2008. We really founded with a policy that since your credit is used to evaluate consumers in almost every part of their life, anyone should have plain and easy access to their credit score so they can take control of their situation. That 75 million was a follow–on round so that was not actually money that we raised. Our investors were very excited about where we’re headed and wanted a larger stake in the company, so we accepted a larger investment. We are a healthy company, our revenue is in the hundreds of millions, we are profitable and there are a lot of other positive indicators that have really surfaced in the past year or two. Certainly being valued at a billion dollars has reinforced the things we’re doing and indicated to us that we are on the right track,” Credit Karma Communications Director Christina Ra said in a recent interview.
Megha Shah for TechFunnel.com