Pros and Cons of Credit Monitoring Services

credit monitoring services

It’s very easy to get confused about whether or not credit monitoring is something that you should invest in. With the amount of credit monitoring services available in the marketplace, it can be even more confusing when trying to understand which service you should choose.

In this article, we’ll outline some of the many various benefits and disadvantages of credit monitoring and identity theft protection services and what they mean for you, the consumer, to help you better understand your financial health.  

What is Credit Monitoring?

Credit monitoring is the process of overseeing a consumer’s credit report. It is usually offered as a service through credit bureaus, credit card issuers, banks, and some independent businesses.

The main purpose of credit monitoring and identity protection services is to routinely check consumer credit reports for any significant or suspicious changes and notify consumers of those changes. Then, consumers are able to identify whether or not the change in their report is correct, fraudulent, or unintentional.

If any of these errors are present, it will require additional action to amend the situation.

Are Credit Monitoring Services Worth the Money?

As previously mentioned, credit monitoring watches your credit and alerts you to any significant or suspicious changes or access to your credit. If a person attempts to use your personal information to open a new line of credit, your credit monitoring service will alert you, usually quickly, rather than finding out months or years after the fact.

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

The cost of paying for credit monitoring services vary depending on the service. If you are still on the fence about the decision, the cost of signing up may make sense for the following reasons:

  • You are already the victim of identity theft, or you are at elevated risk of it
  • You don’t want to perform a credit freeze with your credit reports
  • You are not currently monitoring your credit

If you find yourself in any of the previously mentioned scenarios, credit monitoring may be something that’s worth signing up for to keep you better prepared for the future.

What are the Benefits of Credit Monitoring Services?

According to the Federal Trade Commission, nearly 10 percent of Americans have been victims of fraud. Additionally, in 2013, almost five percent of consumers found mistakes in one of the three significant credit reports. With a credit monitoring service, you have the chance to benefit from several advantages.

Optimize Your Credit Score

Whether you are applying for a new credit card, insurance policy, mortgage, real estate, or any other kinds of loans or lines of credit, your credit score will most likely play a significant part in how much you will end up paying each month.

In this respect, credit monitoring companies can help you make sure that you do not have any incorrect information or fraudulent activity on your credit reports that could decrease your score. Services such as SmartCredit offer additional tools and features that help you take action against inaccuracies on your file.

Help You Plan Your Finances

A trusted credit monitoring service can help boost your financial literacy, but it also provides several ways for you to plan your finances in advance. With a trustworthy credit monitoring service, you have the chance to learn how your credit score is going to be affected across a dozen different activities.

  • Adding a credit card, loan, or credit inquiry
  • Increasing credit limits or credit accounts or transferring accounts to a new credit card
  • Paying off credit cards
  • Missing a payment
  • Adding public records (i.e., tax liens, foreclosures, child support, wage garnishment)

Identity Theft Insurance

Identity theft is a very serious issue that can easily go undetected if you do not pay close attention to your credit reports. The aftermath of identity theft can be an expensive and time-consuming process for any consumer. Not only does it entail lengthy phone calls, but you may also need help from a lawyer to rectify the issue.

With adequate identity theft insurance, depending on your policy, you can be better protected against a variety of circumstances from identity theft such as lost wages, notary fees, mailing costs, legal fees, and more.

What are the Disadvantages of Credit Monitoring Services?

While credit monitoring offers several great advantages, there are a few cons of credit monitoring. Let’s take a look at some of the disadvantages that may come with a credit monitoring service that can help improve your score.

Expensive

Costs for credit monitoring services vary and are dependent upon the service you choose. While a few services provide some basic security at no cost, most credit monitoring services range somewhere between $10 and $35 a month and can reach prices of up to $120 to $420 a year.

Only Alerts You of Theft or Fraud

Credit monitoring and identity protection services typically cannot prevent identity theft from occurring. However, these services can respond to identity theft and alert the consumer.

Monitor Your Credit with SmartCredit

While credit monitoring services cannot 100% prevent credit card fraud, phishing scams, or identity theft from happening, they can help provide you with additional safety precautions to defend your credit.

Monitoring your credit is a difficult task for any consumer to do themselves. With the innovative approach to SmartCredit’s gamified technology, consumers can understand their credit score and credit utilization better, and quickly maximize their credit.

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