It’s no secret that identity theft has been an issue for consumers. In 2022, the Federal Trade Commission (FTC) received 1.1 million identity theft reports, and a similar number of complaints are expected in 2023. The financial toll of online fraud, which includes identity theft, can be substantial. The FTC estimates that it cost Americans $8.8 billion in 2022, with median losses around $650.
One tool that can help detect issues early on is credit monitoring. This service tracks your accounts and alerts you to any changes or suspicious activity, giving you time to start the process of undoing any damage that’s been done.
If you were involved in a data breach, you may receive credit monitoring at no cost. Otherwise, you can pay a nominal fee for the coverage — usually around $10 to $30 a month — or do most of the legwork yourself for free.
Why Is It Important to Monitor Your Credit?
Your credit history can have an impact on your ability to make big financial decisions, like purchasing a home or buying a new (or new-to-you) car.
If you have a spotless report, you could get better interest rates on new loans. On the other hand, if your score is what’s considered poor, you could be denied access to certain financial products altogether.
Even if you’re diligent about abiding by best credit practices, if someone has unauthorized use of your information, they can quickly sink your hard-earned credit score. That’s when credit monitoring comes in handy. If you see an alert corresponding to a change you didn’t make, you’ll know something’s up — and you can move quickly to repair any issues that might impact your creditworthiness.
Generally speaking, it’s a good idea to check your credit reports at least once a year. If you’re making a major purchase, consider monitor your credit for at least three months beforehand to ensure everything is in order.
💡 Quick Tip: Your credit score updates every 30-45 days. Free credit monitoring can help you learn about your score’s normal ups and downs — and when a dip is cause for concern.
Pros vs Cons of Credit Monitoring Services
Credit monitoring can be a useful tool, but there are some drawbacks you’ll want to consider. Here are pros and cons of credit monitoring services.
Pros of Credit Monitoring Services
Many credit monitoring services come with extra features that might help justify their cost. Common examples include:
• Alerts when there are changes to your personal information, significant balance changes, account closures, or hard inquiries
• Access to credit reports and scores from one or more of the three major credit bureaus
• Dark web scans, which checks if your personal information has been compromised
• Identity theft insurance, which can cover any costs you may incur as you’re dealing with identity theft
• Identity recovery services, which can be useful as you repair any damage from identity theft
Cons of Credit Monitoring Service
Even the best credit monitoring service has its limits. Here are some potential drawbacks to consider:
• Cost of a subscription
• Can’t provide 100% protection from all fraud or identity theft
• Can’t fix inaccuracies on your credit report (you’ll need to handle that)
• Coverage may not include monitoring from all three major credit bureaus: Experian, TransUnion, and Equifax
• You may not be alerted if someone uses your name to collect a tax refund or claim benefits from Medicare, Medicaid, Social Security, or unemployment insurance
How to Monitor Credit for Free
There are times when paying for a credit monitoring service makes sense. For example, you want more robust identity monitoring, prefer a program that monitors reports from the credit bureaus, or need help resolving disputes. It may also be a good move if you suspect your information has been exposed.
But it’s possible to do the job yourself (and avoid paying a subscription fee). Here’s how:
Request a Free Credit Report
By law, you’re entitled to a free credit report every 12 months from each of the three credit bureaus. Visit annualcreditreport.com to get started. While you can ask for the reports at any time, spacing out your requests every few months allows you to keep an eye on your accounts throughout the year.
Find Out If You’re Already Getting Coverage
Some accounts include some level of complimentary credit monitoring, so it’s worth a call to your bank or credit card company to find out if you qualify.
Put a Freeze on Your Credit Reports
There are instances when freezing your credit report might be a good move, such as when you believe your data has been breached or if your Social Security number or other sensitive information was stolen or made public.
A credit freeze allows only a limited number of entities to view your credit reports. This means the credit bureaus can’t provide your personal amount to new lenders, credit card companies, landlords, or hiring managers. While this freezes the renting, hiring, and lending process, it also prevents thieves from stealing your identity and opening a new account in your name.
There’s no charge to freeze or unfreeze your credit, and your credit score won’t be affected.
Request a Fraud Alert
If you think you may be the victim of fraud or identity theft, you may want to consider placing a fraud alert on your credit report. Once a fraud alert is placed, you’ll be asked to provide your phone number, which creditors will use to verify your identity whenever an application for credit is made.
There’s no charge to make the request with the credit bureaus, and the alert is active for one year. It has no impact on your credit score.
💡 Quick Tip: What is credit monitoring good for? For one, maintaining a high credit score can translate to lower interest rates on loans and credit card offers with more perks.
The Takeaway
Credit monitoring services can act like a watchdog over your accounts, flagging suspicious activity or changes so you can move quickly to correct inaccuracies or do damage control. You can take a DIY approach to keeping track of your accounts, which can include requesting a free credit report every year from the three credit bureaus. But if you’ve been the victim of identity theft or fraud — or need more robust monitoring — you may want to consider paying for a credit monitoring service.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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