Does Credit Monitoring Hurt Your Score?

Credit monitoring does not negatively affect your credit score. Credit monitoring services are designed to track changes and potential issues on your credit report, providing alerts that empower you to identify inaccuracies or fraudulent activity. These services act as a protective measure, offering peace of mind.

How Credit Monitoring Works

Credit monitoring services continuously track information across your credit reports from major bureaus. They provide alerts for significant changes, such as new accounts being opened, inquiries appearing, changes to personal information like addresses, or public records like bankruptcies. The primary purpose of these services is to notify consumers of activity that could signal identity theft or errors on their reports.

These services allow you to proactively manage your finances and quickly respond to suspicious activity. For instance, if a new credit card application appears on your report that you did not initiate, the monitoring service would alert you. This information is for your awareness and does not involve applying for new credit or incurring debt.

Understanding Credit Inquiries

The reason credit monitoring does not harm your score lies in the type of credit check it uses, known as a “soft inquiry” or “soft pull.” Soft inquiries occur when an individual or company checks your credit report for informational purposes, not in response to a credit application. Examples include checking your own credit score, pre-approved credit offers, or background checks by employers or landlords. Soft inquiries are typically visible only to you on your credit report.

In contrast, “hard inquiries” or “hard pulls” occur when you formally apply for new credit, such as a loan, mortgage, or credit card. These inquiries indicate that you are seeking new debt, and they can temporarily lower your credit score by a few points. Hard inquiries typically remain on your credit report for up to two years, though their impact on your score usually lessens after 12 months. Applying for multiple new credit accounts in a short period can have a cumulative negative effect on your score due to multiple hard inquiries.

What Impacts Your Credit Score

Several factors influence your credit score, with payment history being the most significant. Paying bills on time accounts for approximately 35% of a FICO Score.

Amounts owed, also known as credit utilization, is another substantial factor, making up about 30% of your score; keeping balances low relative to your credit limits is beneficial. The length of your credit history contributes around 15% to your score, with longer histories generally viewed more favorably as they demonstrate experience managing credit. New credit, which includes recent applications and newly opened accounts, accounts for about 10% of your score. While opening new credit can temporarily lower your score due to hard inquiries, responsible use can eventually improve your credit mix and utilization. Lastly, your credit mix, or the variety of credit accounts (e.g., credit cards, installment loans), comprises about 10% of your score, showing lenders your ability to manage different types of debt responsibly.