Consumers have learned the importance of knowing their credit history and credit score. Those who do not pay attention to this important aspect of personal finance are often shocked to discover their credit may not be as “good” as they believed. Because there are so many variations in how scores are calculated and the number of scores available, many consumers decide it is easier to pay for a credit score monitoring service than try to figure it all out on their own. While there are certainly some benefits to having your credit score monitored by a third party, there remains several reasons why this may be a waste of your money. Here we look at credit monitoring services and the benefits as well as drawbacks of using one.
Why Should Your Monitor Your Credit?
The question of whether or not your credit score should be monitored is not really the issue. Obviously with so much riding on where you fall on the credit rating system and the very real threat of identity theft and fraud, monitoring your credit score is important. In reality, consumers can monitor their own credit without paying a third party to do so. Credit score monitoring is offered by each of the three main credit bureaus. For roughly $15-$20 per month, consumers will receive information from the credit bureau monitoring their score showing any changes to that score.
Benefits Of Credit Score Monitoring
There is no doubt that regular monitoring of your credit score is the best way to know if there are significant changes in your score. Individuals working to improve their credit score may look to this service to receive regular updates on their progress. On the other hand, a drop in your credit score may be an indication of inaccurate data reported to the credit bureau or activity that indicates you may be the victim of identity theft or credit card fraud. In either situation, the sooner you discover the problem, the sooner you can address the problem and prevent further damage to your credit and personal finances.
Drawbacks Of Credit Score Monitoring
Some experts consider credit score monitoring akin to weighing yourself daily. While it is important for your health to know what you weight, you do not need to monitor changes in your weight on a constant basis. Considering the fact that credit score monitoring is a paid service, consumers must weigh the benefits they receive against the cost. There are other options available which allow consumers to monitor their credit at no cost, therefore providing many of the same benefits without paying out of pocket. Consumers using these free services may receive a credit score other than the standard FICO score, however it will be close enough to see if significant changes have occurred. In the end, the main goal is knowing if your score is going up or down significantly and understanding the reason behind the change. If this can be accomplished without paying a fee, consumers should consider this option.