Good credit can save you a ton of money, and bad credit can cost you a ton of money. It’s important to monitor your credit score to make sure everything looks right. A common misconception is that a credit inquiry will lower your score. The truth is that it depends on what type of inquiry it is. There are 2 types – hard inquiries and soft inquiries. Checking your own credit is considered a soft inquiry and has no impact on your score.

Why monitor your credit score in the first place

When applying for a car loan, mortgage, or any other loan, you want to know where you stand. A higher credit score means you are a lower risk, and can therefore get a better rate. Conversely, a lower credit score can be a red flag to lenders and can result in higher interest rates. When planning a purchase that requires a loan, check your credit score to understand what kind of rate you can expect, and plan your purchase accordingly.

The other main reason to monitor your credit score is to make sure your identity has not been compromised. Unfortunately, identity theft and fraud are more common than we’d like – criminals, like the ones from the Target breach in 2013, can hack their way into store database which house your data and steal your identity. They can then open bank accounts, sign up for credit cards, write bad checks or do countless other malicious actions in your name. Monitoring your credit will help you stay on top of any suspicious activity and let you stop fraud sooner than later.

How do you monitor your score?

It’s actually very easy! Here are the 10 best credit monitoring sites, so feel free to take a look and compare. And remember, you do not get penalized for checking.