How Credit Karma Won the Millennial Customers

For Credit Karma, its beginning phase was an arduous one. It was a financial services company whose potential customer base was made up of Millennials scarred by a financial crisis only a few months back. And it needed their trust. Now, after approximately 10 years, the company has the confidence of about 75 million members, and 50 percent of those are Millennials. The San Francisco headquartered company started registering a profit from 2015. The company's recent revenues were in the region of $500 million. Its revenues shot up by half in the 2016 to 2017 period.

Small, ambitious beginnings

Credit Karma started out by being known as the company which offered free credit scores. People visited the company website to get help when they wanted to take out credit cards and automobile loans. The company wanted to reconfigure the financial lives of Americans. To do these, it began by undertaking two unpleasant and complex tasks- taking out a mortgage and filing taxes.

The company, in 2017, started a free tax preparation service. It also streamlines the process of taking out a home loan. According to Kenneth Lin, the Chief Executive Officer and founder, the aim of the company is to craft the most premium product among financial services products which the consumer can take advantage of. Lin said that real opportunity exists in this arena to change consumer finance.

Gaining trust

Credit Karma, unlike its many peer companies, did not made money the easy way. The company did not sell its clients' data to multiple third parties and walked away with millions of dollars in revenue. It did not make its revenues on the back of exploitative services like 'credit repair'. The company never badgered its customers with constant emails.

In contrast, Credit Karma earns money when banks pay it every time a site user gets approved for a loan or a credit card. The company must recommend to its customers the right product which is perfect for each customer. All of these needs the collection of lots of data. The website collates a stunning 2.5 terabytes information on members. It calculates billions of numbers to locate products that suit their creditworthiness and needs. Members send their personal information, like Social Security numbers. They also authorize Credit Karma to access the files in credit bureaus. It follows that people implicitly trust Credit Karma.

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