Do I need credit monitoring if I don’t have credit cards?

Credit monitoring may be necessary even if you aren’t making charges.

It sounds a little counterintuitive. Why would you need a monitoring service for a financial tool you don’t even use?

Of course, the credit industry isn’t just limited to credit cards – there is also the business of taking out loans. Even if you don’t use plastic, you may still have a mortgage, a few auto loans, student loans, and personal loans that you may be taking out to do things like renovating or even investing.

So even if you don’t use credit, you have a credit history as long as you have at least one loan taken in out in your name. And with that in mind, you can use credit monitoring to be strategic with loans just like you would with credit cards.

Credit monitoring can mean better lending terms

Staying away from credit cards can be a smart financial decision – especially if you’re easily tempted into spending or like to shop on impulse. But avoiding any open credit lines, including loans, can be really difficult.

While most traditional loans have much lower interest rates than the majority of credit cards, you still need to maximize your credit rating to make sure you can save money over the life of each loan. Consider that most loans involve larger sums of money that usually gets paid off over a period of years or even decades.

Fact: You pay $139,883.68 in total interest charges over the life of a $150,000 mortgage at 5% APR.

So in some ways, it’s even more critical to make sure you maximize your credit score before you apply for a major loan.

Click for free credit score and $1 credit report

Credit monitoring helps protect your identity

A credit monitoring service always serves two individual and entirely separate financial needs. The first is helping you build credit to strategically maximize your credit score. The other purpose is for identity theft protection.

So even if you don’t use a credit card, if your identity gets stolen then a thief may decide to open a few credit cards in your name. Credit monitoring services serve the double purpose of allowing you to watch for suspicious activity following identity theft.