Will Signing Up for Credit Monitoring Hurt My Credit?

The average identity thief uses stolen information for 14 months before the victim realizes his data has been compromised. Credit monitoring services offer to let you check your credit whenever you like, which could prevent identity theft, but some may worry that all those inquiries could affect credit scores. Signing up for this service, however, can do nothing but help your score.

Identification

Signing up for a credit monitoring service will not hurt your score, according to Experian, one of the three major credit bureaus in the U.S. You could look at your score every day and not affect your score one bit. Inquiries through a credit monitoring service are "soft" pulls, which means they are disregarded by the credit scoring formula because "soft" pulls are not applications for credit.

Benefits

A credit monitoring service could help you guard against identity theft or unusual changes in your credit report, such as extremely high balances or a surge in new accounts, according to "The Wall Street Journal." You also could use a credit monitoring service to keep track of your score before applying for a large loan, such as a mortgage. Saving a few dollars per month as a result of a higher credit score could mean hundreds of dollars of savings over the life of a typical 30-year mortgage.

Considerations

Although consumers may check their credit reports for free once a year, you may want to check your score once a month. The credit rating agencies update your report about once a month, so receiving a single report and waiting a year to check again could end up severely damaging your score. If, for example, an identity thief uses all the available credit in the card in your name, delinquent payments on the card could go unnoticed for months. As a result, you could be rejected for loans during this time and not know why.

Is Credit Monitoring Necessary?

Credit monitoring services cost at least $180 per year, although some banks offer this service for free. If you want to look at your credit score frequently, a monitoring service could prove more cost-effective than purchasing single reports. Consumers worried only about identity theft, however, can place a freeze on their credit report--preventing lenders from looking at it--for no more than $30 in their lifetime or arrange a security alert that shows up on the report for free. Monitoring services often come with identity theft insurance.