All You Need to Know about Credit Monitoring

Building and maintaining good credit involves not just managing your finances, but also staying vigilant about your credit reports. This is where credit monitoring becomes essential. Essentially, credit monitoring involves keeping a close eye on your credit reports for any changes or suspicious activity.

Recent data from the Federal Trade Commission (FTC) reveals that around 20% of Americans have fallen victim to identity theft, imposter scams, or credit bureau fraud. Given these risks, it’s crucial to understand your options for safeguarding your financial well-being.

What is credit monitoring?

Credit monitoring involves a systematic and ongoing review of your credit report to spot changes, updates, and potential discrepancies. It’s a proactive approach to tracking your financial health, alerting you to inaccuracies, unauthorized activities, or signs of identity theft on your report(s).

Monitoring your credit doesn’t impact your credit score directly. In fact, it can positively influence your credit by keeping you informed and enabling you to make better financial decisions. While credit monitoring helps you understand your creditworthiness and address issues promptly, it doesn’t offer complete protection against identity theft.

Credit monitoring does not:

• Alert you to unauthorized bank withdrawals
• Block credit card skimming
• Correct errors on your credit report
• File fraud reports
• Initiate credit freezes
• Notify you of fraudulent tax returns or refund collection
• Prevent phishing attempts
• Stop unauthorized credit applications or new account openings
• Secure your personal information

Despite these limitations, credit monitoring is crucial. It helps you take necessary actions and recognize issues that might otherwise go unnoticed.

According to the Consumer Financial Protection Bureau, checking your own credit report doesn’t affect your credit score, as it’s not considered a new credit inquiry. Regularly reviewing your credit report ensures that the information provided to lenders is accurate and up-to-date.

Credit monitoring terms to know

Here are some key terms to understand before choosing your credit monitoring strategy:

• Credit Monitoring Service: A tool, app, or website that continuously monitors your credit report and automatically alerts you to any changes or activities that could impact your credit score.
• Free Credit Monitoring: Services or methods that allow you to monitor your credit without any cost.
• Paid Credit Monitoring: Credit monitoring services that require a subscription fee for their features.
• Tri-Bureau Credit Monitoring: Monitors credit reports from all three major credit bureaus: Experian, TransUnion, and Equifax.
• Single-Bureau Credit Monitoring: Focuses on credit reports from one of the three credit bureaus—Experian, TransUnion, or Equifax.
• Credit Monitoring Alert: Notifications that inform you of any changes or suspicious activity detected in your credit report.

Who can monitor your credit?

Certain entities, such as lenders, landlords, employers, insurance companies, government agencies, and utility providers, have the legal right to access your credit report. This access is strictly regulated under the Fair Credit Reporting Act (FCRA). If your report is accessed without a valid reason, both the entity requesting the access and the credit reporting bureau could be held accountable under FCRA guidelines.

Employers must obtain your written consent to access your credit report. Similarly, lenders and credit monitoring service providers generally need your written permission to view your credit report. This requirement also applies to family members like your spouse or children—they need a valid reason and written consent to access your credit report.

There are rare exceptions where written consent might not be required. For instance, next of kin may need to access a credit report and consider a credit freeze following a loved one’s death. Overall, these regulations are designed to ensure that your credit information is accessed only for legitimate purposes and to protect your privacy rights.

Benefits of using a credit monitoring service

When you monitor your credit, you can continuously review various aspects of your credit report, depending on the method you choose. One of the easiest ways to do this is through a credit monitoring service, which automates much of the process.

Credit monitoring services offer a variety of features, including:

• Access to credit reports and scores
• Address change alerts
• Dark web monitoring
• Hard inquiry alerts
• New account detection
• Potential fraud alerts
• Public records monitoring

These features help you stay proactive and informed about any changes or threats to your credit profile in real time.

Prices and features for credit monitoring can vary widely. Some services are free, while others can cost over $15 per month. Standalone credit monitoring services might offer discounts for additional products and services that enhance your credit, protect your identity, and improve your financial health. Alternatively, credit monitoring may be available as an add-on with a bank account, credit card, identity theft insurance, or other financial products.

What is the best credit monitoring service?

Choosing the best credit monitoring service depends on your specific goals, needs, and budget.

When evaluating different services, consider:

• Cost and Affordability: Assess whether the service fits within your budget.
• Credit Bureaus and Scoring Models: Check which credit bureaus are monitored and the credit scoring models used.
• Features: Look for features like real-time alerts and identity theft protection.
• Reputation and Reviews: Review customer feedback and the service’s reputation.

Before committing, make sure you thoroughly understand the terms and features, particularly with “free” credit monitoring offers. Examine these offers for any hidden fees or cancellation requirements. Additionally, consult your local consumer protection agency and the State Attorney General’s office to check for any complaints against the company.

Other ways to monitor and protect your credit

Instead of, or in addition to, credit monitoring services, you can request free credit reports from each bureau through AnnualCreditReport.com. Previously available once per year, these reports can now be accessed up to once a week at no cost.

The most accurate information about your credit reports comes directly from the credit bureaus, which is where lenders typically obtain their data. However, you might need to pay a fee to access your FICO credit score from TransUnion and Equifax.

Many banks and credit unions now offer credit insights, such as a quick view of your credit score or full access to credit reports. These services are generally available without affecting your credit score, though the information may not be updated in real time.

To further protect your credit, consider the following steps:

• Credit Freeze: Implement a credit freeze if you are concerned about personal information security.
• Credit Card Alerts: Set up alerts on your credit cards to notify you of any transactions.
• Budgeting Apps: Explore budgeting apps that provide free credit score tracking services.
• Regular Statements Review: Check your online credit card statements at least once a month.
• Account Activity Review: Monitor your bank and other financial accounts weekly.
• Credit Repair: Use a credit repair company to address errors on your report.
• Strong Passwords: Use robust and unique passwords for each of your accounts.
• Report Fraud: Immediately report any fraudulent credit accounts opened in your name and take steps to prevent future occurrences.