If you’ve had your identity stolen or are worried it could happen, credit monitoring is a great way to keep an eye on fraud and protect your credit and identity. You can rest easier knowing that you’ll be alerted to any fraudulent credit activity, giving you time to dispute it before the thief severely damages your credit.
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What is a credit monitoring service?
Credit monitoring is a service provided by a company to help you monitor and detect suspicious fraudulent activity on your credit reports. These services, sometimes called credit alerts, can also:
- Alert you to changes in your FICO or VantageScore credit score
- Scan the dark web for your name, Social Security number, phone number, or other personal details
- Provide you with identity theft insurance
How does credit monitoring work?
In general, credit monitoring services work by sending you alerts whenever there are changes in your credit reports or credit scores. It’s up to you to determine if those changes are fraudulent (e.g., an identity thief applied for loans in your name) or if they were triggered by your own actions.
You’ll get real-time alerts from a credit monitoring service if someone:
- Opened an account in your name
- Filed for bankruptcy in your name
- Used your personal information to apply for a loan or credit card, resulting in a hard inquiry on your report
- Changed your personal information (name, address, phone number, etc.) on your credit report
Depending on the service you choose, you can receive immediate notifications about these changes via email, text message, or phone.
How much does credit monitoring cost?
Credit monitoring services can be free or paid, depending on the level of coverage and protection you’re seeking.
What you get with free credit monitoring
There are free credit monitoring services, but your level of coverage will be limited. For example, here are some of the limitations of CreditWise from Capital One, a free credit monitoring service:
- They only monitor your Transunion and Equifax credit reports: Some creditors only report to one credit bureau. If a fraudster applies for a loan from a company that only reports to Experian, you wouldn’t be alerted.
- They only track your VantageScore 3.0 credit score: You have several different credit scores, and your VantageScore isn’t necessarily the one that’ll determine your eligibility for new loans. Most lenders use FICO, meaning you’re not getting the most useful representation of your credit health.
- They don’t provide identity theft insurance: It can be expensive to reclaim your financial identity—the costs associated with repairing your credit and getting legal help add up quickly.
You can also monitor your credit on your own for free, known as DIY credit monitoring, by frequently requesting copies of your credit reports and checking for activity. However, you generally need to purchase your own credit score, meaning you’ll get a better deal by signing up for a free or paid service.
What you get with paid credit monitoring
With a paid credit monitoring service, the level of protection and coverage you’ll get depends on how much you’re willing to spend per month. Many companies sell general identity protection, with credit monitoring available as an additional service.
If you’re only interested in credit monitoring, the best paid plans will:
- Alert you to changes in your credit report from all three main credit bureaus, Equifax, Transunion, and Experian (known as tri-bureau credit monitoring).
- Provide you with your credit reports from all three bureaus over time
- Provide you with credit score tracking (with the best ones offering FICO score tracking)
For an example of actual costs, here are the cheapest credit monitoring plans from major identity protection companies.
- IdentityForce: $23.99 per month for their UltraSecure+Credit individual plan
- PrivacyGuard: $19.99 per month for their Credit Protection plan.
Can credit monitoring prevent fraud before it happens?
No, credit monitoring can’t prevent fraud before it happens. It simply alerts you to situations where fraud may have occurred so you can take action to stop it.
Credit monitoring won’t do any of the following things:
- Keep your personal information safe from hackers
- Stop someone from using your personal data to get a credit account
- Tell you if someone withdraws money from your bank account
- Prevent your credit card from being skimmed
- Recover your identity
- Stop phishing emails
- Inform you if someone collects your tax refund
- Remove errors from your credit report
- Report suspicious activity to credit card companies or other financial institutions
- Freeze your credit when fraud is detected
It’s up to you to spot fraudulent activity and take steps to deal with it.
Do you really need credit monitoring?
You don’t need credit monitoring, but it’s a good idea to at least sign up for a free service.
Because some free services, like CreditWise, monitor your credit reports with two different credit bureaus, they’ll likely be able to spot fraudulent activity since there’s a good chance it’ll show up on at least one of them. The ability to freely monitor your credit score and make sure it’s not dropping suddenly is also reassuring.
Is credit monitoring worth paying for?
Credit monitoring is worth paying for if you can afford it, especially if your personal information was hacked or leaked on the web. However, if that’s the case, you’re probably better off having general identity theft protection in addition to credit monitoring services so that you can more proactively protect yourself.
Will credit monitoring hurt your credit score?
No, credit monitoring won’t hurt your credit score, regardless of how often you do it or which service you choose. Checking your own credit score doesn’t hurt it, nor does checking your credit reports.
While your credit check will show up on your credit report, it’ll be in the form of a soft inquiry, which will never hurt your credit. Only hard inquires hurt your credit, but only by a few points.
