Credit Monitoring Services: Are They Right For You?

You need a good financial game plan in life. That’s a given. If you have big, long-developing financial goals like buying a home or building a comfortable retirement fund, you need fundamental skills like budgeting, saving, investing and maintaining a strong credit score.

That last one — your credit score — can be tougher to track. Even if you know that you can request one free credit report annually from each of the three major credit bureaus, if you’re like most people you can sometimes go months or even years without doing so on your own.

This is where a credit monitoring service can provide value. Whether it’s a free, limited credit monitoring service or one that offers more coverage for a monthly fee, credit monitor services provide you with immediate notification whenever there is any activity or change on your credit report.

What Do Credit Monitoring Services Do?

In today’s high-tech world, many people find it essential to stay on top of their credit score and the changes in their credit report more than ever. This is because so much of your private information, such as social security number, address, date of birth and other key facts about your identity, is susceptible to being stolen on the internet by hackers who can steal your identity to commit fraud.

A good credit monitoring service gives you peace of mind by keeping constant track of your credit score and any credit activity done in your name. You’ll get reports on anything new that affects your credit score. These can be things as simple as an error on a bill payment or more serious developments like somebody trying to open an account in your name. They can also be completely legitimate reports on things you knowingly did, such as apply for a car loan.

Errors are more frequent than you might think — one study by the Federal Trade Commission found that 25% of consumers found incorrect information on their credit report that might negatively affect their credit score.

A credit monitoring service, at your request, will track your credit activity with the three national credit bureaus, Experian™, Equifax^® and TransUnion^®. Each of these reports lists your open credit card and loan accounts, how much you owe on these accounts and whether you’ve made any late payments or missed payments in the last 7 years.

Depending on the limits of service you pay for, credit monitoring services keep you notified of any major activity on your credit report — whether it’s completely legitimate and something you’re aware of or something suspicious that raises an alarm, including:

• Alerts about suspicious activity, such as fraud
• Standard identity theft protection, including Dark Web scanning, SSN monitoring, and ID verification monitoring
• Increases or decreases in credit score
• New accounts being opened
• Any new hard credit inquiry, which happens when you make a formal loan application at a bank
• Adjustments to credit card balances or credit utilization rate
• Late payments
• New derogatory credit information
• Updates to your personal identifying information, such as name, address, etc.

Advantages

You should be in the habit of checking regularly for errors on your credit report because they do happen occasionally. If you don’t have the time or know what to look for, a credit monitoring service can alert you to potential red flags as soon as they appear, as well as provide other assistance (which typically costs more) to assure your credit remains in good standing, including:

• Instant access to credit reports and scores: You get one free report each year from each of the credit bureaus; with a credit report monitoring service you get constant access to what’s in your report.
• Real-time notice: If there are any changes to your report, whether legitimate or not, you are instantly notified.
• Identity theft protection: You may pay more for this service, which scans the dark web (where scammers can find your private information if it’s been stolen), and also tracks your social security number to see if it shows up where it shouldn’t.
• Credit score analysis: In addition to reporting your score, this service provides insights on what’s negatively affecting it, as well as tips on how to build better credit.
• Help with challenging errors: Many people find the idea of challenging bad information on their credit report to be confusing or intimidating; some credit monitoring services offer dispute assistance to help smooth the way.

Disadvantages

Not all credit monitoring services are alike. Here some factors to give you pause before relying on this service:

• Cost: There are some free credit monitoring services available, but they provided limited protection; for the more advanced plans, you can expect to pay around $10/month or more depending on optional coverages.
• Complacency: Just because you have a credit monitoring service does not mean you can sleep on worrying about credit; you have to stay actively involved, practice habits that build good credit and correct issues that do arise promptly.
• No guarantee: A credit monitoring service can spot most problems after they occur, but no service can prevent identity theft or bad information from getting into your report with 100% certainty, nor can they fix all problems without your involvement.
• Multiple bureau coverage: Not all plans cover all three credit monitoring bureaus, which are independent and may have different information about your credit status.

Should You Pay For Credit Monitoring?

Whether you should sign up to pay for a comprehensive credit monitoring service really depends on how complex your financial footprint is, as well as how often you keep tabs on your credit report. As stated, you are entitled get your credit score for free once each year, from each of the three credit bureaus, by going to AnnualCreditReport.com. If you space those reports out every few months, you have a good chance of spotting problems soon after they arise.

But some people can really benefit from the constant surveillance provided by a paid credit monitoring service. Here are some of the top reasons:

• Let’s say your financial profile is pretty complex. If you have multiple credit cards, some student loans, a car loan, and several utility bills all active at once, it might be easy to overlook a missed payment. Also, having multiple lines of credit increases the exposure of your information. Credit cards in particular are easy targets for clever criminals who seek to use your credit card number to commit fraud. If your private information is tied to multiple accounts, it might be worth it pay for a credit monitoring service to keep tabs on it all.
• Another reason to pay for this service is just peace of mind. If you’re not the type of person who has the time or inclination to regularly check your credit report, having a professional credit monitoring service might be worth the relatively small monthly fee.
• Preparing for big life changes. If you think you’d like to buy a house in next several years, for example, it’s definitely time to start shoring up your credit score. While there may be inaccurate information on your report that can be fixed in a timely manner, there may also be true information, such as missed or late loan payments, which only go away with the passage of time.
• Credit analysis and guidance. In addition to alerting you to dings to your credit score, some subscription credit monitoring services offer tips on how to fix problems and build your credit score. If you’re considering what is likely the largest loan of your life, a home mortgage, a strong credit score is crucial to you qualifying for the mortgage, much less getting the lowest possible interest rate and best terms (which can save you tens of thousands of dollars over the course of a home loan).

Finding The Best Credit Monitoring Service For You

In an age where we use our credit and debit cards multiple times every day, both in retail stores as well as online, our vital financial accounts have never been more vulnerable to hackers and fraudsters. For this reason, many people feel it’s a necessary part of their financial health to get instant notification from a credit monitoring service as soon as anything suspicious happens to their accounts.

There’s no shortage of companies who can monitor your credit. You can shoot in the dark at the first ones that come up on an internet search, or you can look to online consumer protection websites who evaluate and rate these firms so you don’t have to. Look for companies that not only notify you of activity on your credit report and your bank accounts, but those that also offer identity theft protection, as well as insurance coverage in case your information is stolen under their watch. Also be sure to choose a company that monitors your credit on all three credit bureaus.

Credit Monitoring Services FAQs

Here are some of the most commonly asked questions from people considering a credit monitoring service.

Will using a credit monitoring service actually help my credit score?

A credit monitoring service does not actively work to build your credit score, but in multiple ways it can help you build your score over time. First, it will monitor your credit report frequently and alert you of new issues that arise that bring down your score. It will also help you fix any errors in your report. Finally, a more comprehensive service will provide analysis of your score and provide guidance on ways to build your score going forward. 

What isn’t covered in credit monitoring?

A credit monitoring service does just that — it monitors your credit report and notifies you of any new activity, such as a new credit card application or a missed loan payment. It can provide some help in fixing bad information, but it can’t fix information that is true and it can’t provide 100% deterrence of fraud.

Some services provide a level of identity theft protection, but once a bad actor gets your information, no credit monitoring service can prevent them from using your credit card number, applying for new accounts in your name, withdrawing money from your bank account or filing a tax return in your name and stealing your refund.

Is credit monitoring the same as identity theft protection?

While credit monitoring alerts you to any changes or activity on your credit report with the three credit bureaus, identity theft protection provides comprehensive protection of your private information across the internet, the Dark Web, public records and more. Since no identity theft coverage is 100% fail-safe, it will immediately alert you if your identity is stolen.

Identity theft protection can tell if your Social Security Number, passport number or other crucial identity information pops up where you don’t want it to. It also monitors your bank and financial accounts, provides antivirus and other security for your mobile device and computers, provides assistance in combating any fraud that does occur as well as insurance to cover significant losses.

What to do if your credit monitoring service alerts you of an issue?

Since a credit monitoring service alerts you to any activity on your credit report, you will get a notice for completely legitimate actions that you know about, such as applying for a new credit card. However, if an alert points out something that is an error (a missed payment that you know you made) or what appears to be a case of identity theft, you should start by filing a dispute with each of the three credit bureaus.

Each credit bureau has a dispute form on their website. Provide all the information they require, plus documents that support your claim, and keep copies of everything. Solving the dispute may take some time, but it’s important that you get all bad information removed from your credit report.

The Bottom Line

A good credit monitoring service gives you peace of mind by keeping constant track of your credit score and any credit activity done in your name. You’ll get reports on anything new that affects your credit score, whether it’s something you know about or perhaps looks suspicious. The most important value of this service is that you can immediately begin to take steps to remove bad information or report fraudulent activities done in your name.

It’s important that you build and maintain a good credit score, and it’s easy to track and understand your credit score by downloading the Rocket Money^SM app today.