Introduction Credit monitoring services have over time been adopted widely in the credit markets. These services regularly check your credit reports and notify you when there are changes like new accounts that were opened, or if there were any payments made that were made a bit later than they should have been. As major corporations store millions of people’s data, they are hacked and this exposes people’s private information; with credit monitoring, you are assured that you are well aware when someone is using your information illegitimately.
However, the question that arises more often is - is using credit monitoring damaging for the credit report? Does it have any impact on your credit score or does appear in the form of an inquiry on the credit report? The whole process of credit monitoring and how it affects credit scores is still quite shrouded, with many people not fully understanding it. This article will answer the question of whether credit monitoring impacts or affects your credit, as well as how it works, including whether it affects your credit reports and scores.
What is Credit Monitoring?
Credit reporting companies use your permission to frequently get your credit reports from one or all of the three credit bureaus namely Experian, Equifax, and TransUnion.
They monitor your reports for changes like:
- Accounts created in your name and start using them
- Late payments
- Changes of address
- Hard credit inquiries
It notifies the customer about any malicious activities through an email, phone call, or text message if any is noticed. This enables one to act fast to avoid any form of fraud or identity theft within their accounts. Some services also offer you a subscription to your credit reports and scores.
The simplest form of credit monitoring is to simply track changes within the reports. The final step in identity protection is identity theft insurance and restoration services which are much more sophisticated. Some of these services are free while others are offered for a regular membership fee that could be on a monthly or annual basis.
Does Credit Monitoring Harm Your Credit Rating?
The short answer to this question is that credit monitoring does not impact credit scores with Experian, Equifax, and TransUnion. If you only take membership with some simple credit monitoring services, they will not appear on your credit reports. The process of viewing own credit reports and scores is called soft credit check or soft credit pull, and soft credit checks are not visible to any creditors and therefore do not affect one’s credit.
This is different from when you apply for new credit, for instance, credit cards, auto loans, or mortgages. Those applications request a ‘hard’ inquiry to verify your credit, which results in its reflection in your credit reports and a short-term detriment to your scores.
Therefore, you can be assured that when exercising basic credit monitoring this only pulls soft inquiries that are not visible to the lenders and therefore does not harm the credit. While we accept identity theft insurance though may require a hard credit check, which could slightly pull down your rating a little bit at first. However, credit monitoring per se without actually cheering your reports does not affect your scores in any way.
Will Credit Monitoring Appear on the Credit Reports?
Once more, ending up being a participant in fundamental credit monitoring will not be reported in your credit reports with Experian, Equifax, and TransUnion as earlier mentioned, the credit monitoring company is not one to open a new account or line of credit in the client’s name. It is zero in terms of reporting activities.
If you buy a subscription service that offers some form of identity theft protection and that is accompanied by some form of credit check then this is likely to involve a hard inquiry that can be reported in your credit report. Applicants’ credit history can also be valuable for insurers who may wish to verify the credibility of their potential clients before covering their fraudulent risks. If there is an inquiry from a credit monitoring company noted in your report then it must be due to that.
Of course, the personal and account information that the credit monitoring service provides is going to appear on your credit reports But that’s not the same as the entries that the monitoring service itself creates on your actual credit files — none of those things are new inquiries. The major bureaus aren’t even aware that the third-party service is running a credit check on you.
How Much Is Credit Monitoring Going to Cost?
If you are an ordinary consumer, you can get free or low-cost credit monitoring services that do not require utilization of your credit and can give you important notifications if your identity or credit is stolen or fraudulently used. These risks of identity theft rise as the availability of your information on the internet and in the real world remains on the rise. Alerts – in cases of suspicious activity, you can be informed early enough to reduce the effects of the activity.
There are higher levels of monitoring services where users can get more than just monitoring, and as a result, they attract higher prices. Reflect on the extent that you would prefer depending on the risk factor, to gain the best level of monitoring. Another advantage of this way is that at AnnualCreditReport. com you also can monitor your credit for free and do this as often as you want.
What one needs to remember is that using a credit monitoring service means will not in any way safeguard your credit or shield you from identity theft. The above, coupled with daily or weekly monitoring, strengthens passwords, avoids sharing details, safe payment options, and avoids questionable links can protect your financial data. It is recommended to apply monitoring on top of other safety measures that are considered the best ones.
The Takeaway
Even by applying for basic credit monitoring only, there will be no impact on the credit scores and no list of inquiries reflected on your reports. Services for monitoring credit reports only conduct soft inquiries which lenders cannot observe and do not affect your credit report. Some more advanced services inclusive of insurance and other features though may require one to inquire.
Continuing to use free basic credit monitoring enables you to receive a notification showing that someone has applied for credit under your social security number, while not necessarily affecting your credit rating. This may help know if someone has stolen your identity and act fast to reduce the amount of money you lose. In all likelihood, you already have sensitive personal information being stolen from you, so using yet simple free monitoring will do just that.
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