Monitoring your credit, which includes regularly checking your credit score and reviewing your credit reports, is an important habit to develop. The process not only gives you the chance to see how your actions impact your credit score but also helps you spot potential issues like card fraud that could harm your credit history. It can also help with identity protection by keeping you informed about unusual changes to your credit.
There are several free credit monitoring services available, and for many people, that may be all you need. In those cases the credit monitoring cost is non-existent. But in some cases, it might be worth paying for a credit monitoring service to gain access to more comprehensive information and protection. After all, your personal information is at stake and the credit monitoring cost may well be worth it to protect yourself against a data breach or other issue that could result in bad credit.
What are the benefits of credit monitoring?
Credit monitoring services can vary in what they offer. But in general, the habit of keeping track of your credit can be an important part of a healthy financial plan. Benefits include:
- Learning which factors impact your credit score.
- Seeing your progress as you build your credit history.
- Spotting potentially inaccurate information that can harm your credit score, so you can dispute it.
- Detecting identity theft early on before it has the chance to wreck your credit.
- Getting frequent updates about your credit reports directly in your email inbox or mobile app.
Monitoring your credit is especially important while you're building your credit history. As your score improves, you'll have a better chance of qualifying for credit at low-interest rates. For example, you can compare personal loan interest rates via Credible based on your credit score.
What's the difference between free and paid credit monitoring services?
The features you can get from both free and paid credit monitoring services can vary depending on where you look. But in general, free services may provide access to your credit score from one or more of the three national credit bureaus. You may also get access to key information from one or more credit reports, though you'll rarely get to see the actual report.
In most cases, the free credit score you get from these services is a VantageScore, which can give you a good idea of your overall credit health, but it isn't used by most lenders when you apply for financing.
In contrast, many paid credit monitoring services will offer access to your FICO credit score, which is a popular score among lenders, from all three credit bureaus. You may also get access to all three credit reports or at least the important details from each.
Other benefits may include dark web monitoring, identity theft insurance, the ability to lock and unlock your credit reports quickly, and more.
Is it worth paying for credit monitoring?
In many cases, using one or more free credit monitoring services may be enough to get you the information you need to build and maintain good credit. However, if you want maximum identity protection in the event of identity theft, paying for a service that includes insurance protection can be worth it.
That said, the chance of being a victim of identity theft is generally low, and the cost of paid credit monitoring services can range from $10 to $35 per month. So if you're considering paying for credit monitoring, review all the features the service provides and compare it to the cost to determine whether it's worth it for you.
The bottom line
Paid or free, credit monitoring is an important part of a successful financial plan, so it's important to make sure you're checking your credit score and reports relatively often.
Credit monitoring services typically not only provide you with information about your credit score but also can send you real-time updates when there are changes to your credit reports, such as new accounts, hard inquiries, and personal information.
If you're planning to buy a home or applying for another form of credit, monitoring your score and reports and acting on the information you find can help improve your odds of getting approved with favorable rates. It can also make it easier to qualify for lower insurance premiums.
And remember that shopping around for credit is also an important step in that process. For example, you can compare mortgage rates and lenders via Credible to ensure you get the best terms for your home.