Are Credit Monitoring Services Really Worth It?

September 29, 2023

Are Credit Monitoring Services Really Worth It?

Credit monitoring services can be beneficial for some people, but whether they are worth it depends on your specific financial situation, goals, and preferences. Let’s explore some key considerations as you pursue better financial health.

What are the advantages and disadvantages of credit monitoring services?

Everyone is entitled to free annual reports from the three major credit bureaus. These show you all credit and loan accounts and their status. However, credit monitoring can give you updates as soon as they happen, including new account inquiries and closures.

Credit monitoring services make it easy to regularly check your credit score and activity without having to request them individually from the credit bureaus. This convenience can save you time and effort.

However, some people find the cost isn’t worth the benefits. You might prefer your free annual reports or your institution’s built-in credit tracking if you rarely check your credit score or aren’t actively improving your credit.

Or, look for a free credit monitoring service. You could always upgrade if you need more detailed monitoring as you approach a major purchase or life event. Consider what’s most important to you in your credit journey, as well as your risk for identity theft or credit fraud.

Is credit score tracking the same as credit monitoring?

Many financial institutions, such as Capital One, Chase, and Discover, allow you to track your credit score for free. This can be a great way to measure your progress. You can also check your score if you’re about to apply for a credit card, for instance, without having to request an entire credit report.

Some institutions offer a more detailed feature, such as Chase’s Credit Journey or Capital One’s CreditWise, that will alert you about any new inquiries or accounts. This may be suitable if you want a general overview of your credit habits. For more detailed monitoring and identity theft protection, though, a credit monitoring service may be worth it.

What are some reasons to monitor your credit?

As the name suggests, a credit monitoring service keeps a watchful eye on your credit score and accounts — both past and present. For some people, the free annual report is sufficient. However, you may want to set up credit monitoring if you:

  • Are actively searching for a home, job, or loan and need to make sure your credit is in good shape
  • Have had your identity or financial information compromised, which could put you at risk for identity theft or fraudulent activity
  • Want immediate alerts if an account is closed or if a new one is opened in your name

What else can you do with a credit monitoring service?

Track and Pursue Your Credit Goals

If you’re actively working to improve your credit score, credit monitoring can help you stay on track. You can see how your score changes in response to certain activities (e.g. applying for a new line of credit). Plus, you can quickly address any errors or issues that may arise.

For example, Tim plans to purchase a home within the next two years. He wants to be sure his credit score is good enough to get a good mortgage rate. One day, his credit monitoring service alerts him that someone has made a new credit inquiry in his name. Because he doesn’t recognize the activity, he can freeze his credit and investigate the issue — and protect his hard-earned score until he’s ready to apply for a mortgage.

Identity Theft Protection

Credit monitoring services alert you to any suspicious activity on your credit report, such as strange inquiries or new accounts opened in your name. They often have resources to address the problem. Remedies may include placing a freeze on your credit or submitting a fraud alert to the creditor in question.

Your credit monitoring service can also provide the details you need to submit a police report and identity theft report, if applicable.

Credit Education

For credit, knowledge is power. Some credit monitoring services provide educational resources, such as:

  • Guidance on how to improve your credit score
  • Explanations of how credit works and how inquiries, account openings and closures, and credit line usage affect your score
  • Tips on how to effectively manage your credit
  • Ways to use your cards to build a c credit history or boost your score (e.g. using a card for small monthly purchases and paying them off immediately)
  • A simulator tool to show possible changes to your score based on different events (e.g. a new account or inquiry).

For example, Bethany comes from a lower-income background. She’s landed a well-paying job and wants to start building her credit. She has a card with a low limit and purchases gas with it every month, then pays it off immediately. Now, she’s getting credit card offers. She can use her credit monitoring service’s educational tools to see how a new card might affect her score.

Are credit monitoring services safe to use?

As with anything involving your finances, do your homework before choosing a credit monitoring service. Make sure it’s reputable by reading reviews. Be wary of any red flags, such as:

  • An unsecured website. Any site that handles financial information should have an SSL certificate, meaning the URL will start with “https://.”
  • Claims of guaranteed credit score improvement. Nothing is guaranteed.
  • Requesting payment for a basic credit report. Under U.S. federal law, all consumers are entitled to free annual reports from the three bureaus: Experian, Equifax, and TransUnion. In fact, TransUnion now offers free weekly reports.

Should I monitor or freeze my credit?

A credit freeze may be a more cost-effective option if your primary concern is preventing unauthorized accounts and you have no plans to open new accounts. A credit freeze restricts access to your credit report, making it difficult for anyone to open new accounts in your name. Therefore, you can rely on your annual reports. (But be sure to get those, as well!)

Wrapping up

Credit monitoring services can be worth it for people who have specific credit-related goals, need identity theft protection, or want a convenient way to actively watch their credit.

Our iLOCK360 service delivers top-of-the-line credit monitoring and identity theft protection. If you’re ready to secure your finances, improve your credit, or prepare for a major purchase, iLOCK360 will keep you safe and informed. Click here to learn more about iLOCK360 and see how TCG can help you take control of your financial future.

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