You’ve probably heard of credit monitoring companies, and maybe you’ve looked into them a bit.
Certain services tend to come up a lot. But some people are unhappy with the services that they get and feel scammed.
Identity theft is a huge concern for all Americans, and rightfully so. Billions of dollars are lost each year to fraudsters and it seems that anyone can find their name and SSN on a black market website!
Most of all identity fraud is caused by a stolen credit card. Other times, a fraudster will try to open up a new card in your name. Maybe they’ll use your SSN to take out a loan. All of these things can negatively affect your credit score and may even lower your chances of getting a mortgage or a loan.
Because of this, you might find that you need credit monitoring services to make sure that you are kept aware of your credit activity.
What are Credit Monitoring Services?
Credit monitoring services are exactly what they say on the tin. They monitor your credit history for inquiries and track them, checking for inquiries that seem out of place. These inquiries may indicate that fraud is taking place.
By using credit monitoring, you are essentially protecting yourself from one of the most common forms of identity theft.
It’s also hard to monitor your credit on your own, especially if there are requests made that you don’t know about. A credit monitoring service makes this easy and lets you know when there might be potential fraud on your account.
How do They Work?
Your credit monitoring service has access to your credit report and uses this information to check whether or not a new inquiry has been made. If it has, they will notify you of the inquiry and you can then determine if it’s fraudulent or not.
Credit monitoring will not only check for inquiries, but will check for changes in your accounts that seem suspicious or out of character. For example, if your credit card is maxed all of a sudden, your monitoring service will notify you of the change.
Sometimes, your credit monitoring service will notify you of changes that you made yourself. This is normal, and you are able to call or reply letting them know of the situation.
Is Credit Monitoring Legit or a Scam?
Most credit monitoring companies offer a completely legitimate service, and often offer extra features as well. Some extra features can sometimes include:
- Access to your credit score.
- Credit tracking to show trends in your credit history.
- Identity theft protection.
- Credit freezes.
Read the full list of identity theft features, these companies offer.
Some, however, will try to scam you. Those companies typically will offer a free credit report and then sign you up for a re-bill of credit monitoring services that you did not order. Stay away from these companies, and only purchase credit monitoring from trusted companies!
What is the Difference Between Credit Score and Credit Report?
Your credit score is a numerical representation of your credit risk to lenders of all types, from banks to mortgage lenders. It ranges from 350 to 850 and the formula was developed by FICO in the mid 20th century.
Your credit report does NOT give you your credit score. Your credit score is simply a number that lenders will take into consideration. Anything over a 720 credit score is considered ‘good’ and with that score, you will be able to qualify for most loans.
Almost all companies do not give you your actual credit score, but instead a representation of what your score is likely to be. Do NOT consider these scores as your actual credit score!
It is less important to know your actual credit score than it is to keep a responsible credit history.
However, if you want to know the credit scores that real lenders are using, FICO has a service called MyFICO. FICO have developed the credit score and still is responsible for the scores that the bureaus give.
For a low price of $30/month, you can get access to all your FICO scores, from all 3 bureaus, as well as the variations of the scores that lenders are using! Or, for a one-time fee, get your credit score right now!
Can Checking My Credit Using Credit Monitoring Lower My Credit Score?
No. Your credit score is dinged only when you apply for credit or an extension to your credit. This is called a hard inquiry. This is because applying for a lot of credit at once can be a sign of over extension and may predict an irresponsible future.
If someone does a credit check on you, whether it be you, an employer, a landlord, or a lender, then it is considered a soft inquiry. Soft inquiries do not affect your credit score. Simply checking your credit score or tracking it with a credit monitoring service does not hurt your credit score in any way.
However, some soft inquiries may be considered hard inquiries if they are considered to be a signal to request more credit. Using credit monitoring services will not be considered a hard inquiry.
With credit monitoring services, you’ll be able to check your history for fraud so that you protect your credit score, without being penalized for checking!
What is a Credit Freeze, and How Can it Protect Me Against Identity Theft?
To get a very specific answer, read our post on ‘What is a Credit Freeze‘ for clarity.
Some monitoring services offer a credit freeze that you can do right from your computer, phone, or mobile app. A credit freeze means that, from the initiation of the freeze, no new credit may be taken out or requested. Most services will allow you to stop the freeze at any time, instantly.
If you see that your identity may have been stolen, you may request a credit freeze to prevent any more damage from being done. From there, you can cancel any cards that might have been compromised, call up your credit bureau to dispute any changes to your history, and contact your bank in case any loans have been taken out in your name.
A credit freeze is the recommended course of action if you find that your SSN and credit card information have been released on the Internet or if they are being used by someone you know.
Where Can I Get a Free Credit Report?
If you are from the USA, you are entitled to a free credit report from one of the three bureaus at AnnualCreditReport.
Annual Credit Report was created as a joint project between Experian, TransUnion, and Equifax after the government ruled that it was unfair to make citizens pay for their credit report. You can order one from each bureau once a year. What many people do is order one from a bureau, then 4 months later order another from another bureau, and so on.
This credit report includes your recent credit history. It does not include your credit score.
Who Offers Credit Monitoring Services?
We at Elite Personal Finance have constructed a list of the Top 10 Credit Monitoring Companies so you can learn which company is best for you. All of the companies on our list are trusted and verified by us, who have done careful research so you don’t have to!