Credit monitoring: Is it worth paying for?

5 min read
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Credit monitoring services are designed to scan your credit report for any changes and suspicious activity — an important tool as cases of credit card fraud continue to rise within the United States year over year.

According to the Federal Trade Commission (FTC), credit card fraud is the most common type of identity theft with over 271,000 reported cases in 2019 (more than two times the number of cases reported in 2017).

Incidents like the 2019 Capital One breach, affecting 100+ million cardholders and applicants across the U.S. and Canada, have dotted the news landscape in recent years and remind cardholders that both vigilance and preparedness is key.

Whether you own a travel or secured credit card, a credit monitoring service can help you identify and reverse any unauthorized changes to your report early on. But the question of whether a free or paid service is best for your lifestyle depends on the range of features you prefer.

What is credit monitoring?

Credit monitoring, in the simplest terms, is the process of overseeing credit files. It’s usually offered as a service through credit bureaus, credit card issuers, banks and independent companies.

The role of credit monitoring services is to routinely check credit reports for any changes and notify individuals of these changes (typically via text, email or phone call). Then, consumers can identify whether the change in their report was accurate, fraudulent or accidental and take further action to amend the situation.

What’s included in credit monitoring?

With the help of a credit monitoring service, cardholders can easily keep tabs on their financial health and better prepare for new credit opportunities in the future.

Typically, credit monitoring services can alert you to a number of changes. Here are a few you can expect credit monitoring to pick up on:

  • New accounts, such as a new credit card or mortgage loan
  • Hard inquiries, which typically occur when you apply for a new line of credit (such as a rewards credit card or personal loan
  • Changes to your home address, which can indicate a thief’s attempt to reroute your mail
  • Any instances of your personal information on the dark web, such as credit card information or your social security number
  • Payment history and account balances
  • New public records, such as bankruptcy or lawsuits

What credit monitoring can’t stop

While a credit monitoring service may offer identity theft protection and monitoring services, it’s important to note they are not one and the same. Identity theft protection might include dark web scanning while credit monitoring focuses on changes to your credit report.

For example, if your credit card information is used to make a purchase without your knowledge or consent, your credit monitoring service will alert you to this fraudulent purchase but typically can’t do much more. The situation is then left in your hands to contact your credit card issuer, remove the charge and obtain a new card and account number.

Some services, though, make it easy to file disputes should an incorrect or accidental change appear on your report. Experian’s free credit monitoring service, for example, offers an online dispute feature to seamlessly submit corrections to your Experian report, if needed.

The best credit monitoring services for 2020

 

 

Service name Superlative Summary of services Cost Credit bureaus reviewed
Experian free credit monitoring Best free credit monitoring service A monthly updated credit report

Credit report and account balance change alerts

FICO® Score 8 credit score tracking

Ability to submit online credit report disputes

$0 Experian
CreditWise® from Capital One Best issuer-backed credit monitoring service (no credit card number or Capital One affiliation required) TransUnion credit report change alerts

Dark web scanning and social security number tracking

VantageScore credit score simulator

Weekly VantageScore update

$0 Experian and TransUnion
IdentityForce® Best paid credit monitoring service Credit and fraud monitoring, as well as dark web and social media identity monitoring

Activity tracking and fraud/identity threat alerts

Identity theft insurance, customer service options and more

UltraSecure+Credit only: Monitors all three credit bureau reports and offers a VantageScore tracker and simulator

UltraSecure: $17.95 per month or $179.50 per year (currently 30-day free trial)

UltraSecure+Credit: $23.99 per month or $239.90 per year

Equifax, Experian and TransUnion

The cost of credit monitoring services

The cost of credit monitoring varies based on the service at hand. Some allow you to use their service free of charge, such as Experian free credit monitoring and CreditWise® from Capital One, while others cost upwards $20 a month (or 200-some dollars a year).

What varies based on the credit monitoring service you use is which credit bureaus are being monitored  — Experian, Equifax, TransUnion or all three — and which credit scoring model is being used to track or simulate your credit score (typically VantageScore or FICO).

As for the differences in credit scoring models used, there’s no need to fret; your score won’t change much model-to-model. Both FICO and VantageScore range from 300 to 850 and utilize data from all three credit bureaus.

Typically, a free credit monitoring service provides everything you need, including your credit score, credit history and alerts to changes on your report. If you’re paying for a credit monitoring service, it’s advisable that it monitors reports from all three credit bureaus, as well as offers insurance protection in the event of fraud.

Free credit monitoring services

“There are plenty of services out there but I would normally recommend consumers start with their current credit card provider first,” says Jeff Wolniewicz, financial planner and founder of Complete Wealth. “Often, they provide this service for free or for a very low price compared to other service providers.”

Discover, for example, offers a free FICO scorecard, including your credit score, Experian® credit report monitoring and dark web scanning. Similar to CreditWise® from Capital One, Discover credit monitoring is open to everyone, not just Discover cardholders. For added protection, check to see if your card offers a spending alerts feature that informs you when a purchase is made with your card information.

Further, Wolniewicz recommends apps like Mint that combine budgeting tools and financial health services.

“Their service will allow you to link all active accounts so that you can also track your spending monthly,” Wolniewicz says. “They provide a great and free credit reporting service that updates weekly and also provides some educational tips on improving your credit score.”

Other ways to monitor your credit

Though free and paid credit monitoring services are fantastic tools, you still have the ability to monitor your credit report without the help of outside apps and services.

Thanks to the Fair Credit Reporting Act (FCRA), each credit bureau is required to supply you with a free credit report once a year, should you ask. Amid the coronavirus pandemic, the FTC announced all three credit bureaus are now offering free credit reports each week through AnnualCreditReport.com.

To further protect yourself from fraud or identity theft, you have the option of placing a free fraud alert on your report through any or all of the three credit bureaus. In doing so, lenders will directly contact you to verify your identity before approving any new lines of credit. According to the FTC, fraud alerts typically last for one year and can be renewed every year going forward.

If your information is ever compromised, you have the ability to freeze your credit file for free by contacting each credit bureau. More information for contacting these bureaus can be found here.