Credit Karma raises $175M to make credit resources available to every consumer

Underscoring how desperately the personal credit industry needs a makeover, San Francisco startup Credit Karma on Tuesday announced it has raised $175 million in venture financing.

The Series D investment brings Credit Karma’s funding to $368.5 million since the company was founded in 2007. Investors in the round include Tiger Global Management, Valinor Management and Viking Global Investors. The new funding puts the company’s valuation at an estimated $3.5 billion.

Credit Karma started by providing consumers free credit scores and full credit reports from the major credit bureaus through a remarkably easy-to-use Web and mobile app. Users have to provide only basic information and need not fill out lengthy forms that ask for personal details. Unlike many of the credit score websites out there, Credit Karma doesn’t ask for credit card information so it can fool you into a pricey monthly subscription.

Over the past few years,the company has added a suite of financial services to help people reach their personal financial goals, such as credit report monitoring, personalized recommendations for improving one’s credit score and suggestions for credit cards and insurance that offer the best savings. The company says it has more than 40 million members.

The company said it will use the new financing to build out more financial tools and resources for its users, including student loan consolidation and financing a new car purchase.

“Today, no one tells you when your credit rating goes up or when a lower interest rate is available for your loan,” Ken Lin, Credit Karma’s CEO and founder, said in a written statement. “We’ll soon be able to let people know when they have an opportunity to save money and if they’ll be approved, with new levels of certainty. Better yet, they only need to share their complete application when absolutely necessary, usually after knowing whether or not they’re approved.”

Credit Karma is part of the growing sector of financial tech companies that include not only consumer resources sites that offer financial services that are — for the first time, in many cases — free and easily accessible, but also online lending sites such as Lending Club and Lenda, mobile stock-trading apps such as Robinhood and free financial advisers such as WiseBanyan. Venture capitalists and corporate investors such as Citi, Google and MasterCard are investing heavily in this space. Deals and investment dollars for fin tech are on the rise, with 2015 set to double 2014′s funding levels. Last year, $1.4 billion was invested across more than 110 deals, which included 12 $50 million deals in companies such as Mozido, Credit Karma and OnDeck Capital, according to CB Insights. There has already been more than $700 million invested this year, including large deals in Coinbase and LendingHome.

Image: Credit Karma mobile app screen shot from Creditkarma.com

 

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