Credit monitoring is a service which alerts you whenever there is any change in your credit report. This gives you the chance to find the error if any and inform same to the credit bureau. It is necessary to start sorting out any problems before they really get out of hand. Any error can lead to the rejection of the loans when you need the most.
Nowadays, our personal information is more under threat than ever before. But it is good to know that defenses against them have also increased. There are plenty of free credit monitoring services provided online offering good benefits but yes lack of in-depth service.
What Does Credit Monitoring Do?
You can find a few common features in all the top products in the market but the details of what these services provide you will vary product to product. These credit monitoring companies will keep on checking on your credit file and detect any unusual changes to it. If it finds any suspicious comes across their radar, the companies will alert you. In the most cases, they will also work with you to resolve any issues.
The types of activity that a credit-monitoring service will notify you about include the following:-
- Hard Inquiries: The financial institution will run a credit check when a credit card or loan application is submitted in your name. It adds a “hard inquiry” listing to your credit report.
- Existing-Account Changes: Credit reports include all details on your balance and payment history with each of your credit cards or existing accounts of credit.
- New Accounts: Credit reports note whenever a new credit card or loan is opened in your name.
- Any new Public Records: These include information about bankruptcies, tax liens, and civil court judgments.
- Any Address Changes: Any address change associated with a credit card or loan listed in your name can be found on your credit report
- Non-Credit Red Flags: Nowadays, security companies have created identity-theft solutions which is more efficient than the traditional service. These providers are often referred to as “identity-protection services”. For example, they might monitor any bank-account activity or payday-loan applications.
If these activities are not initiated by you and you do not know of these any activities. Then you can assume that it is an evidence of fraud.
A credit-monitoring service merely provides timely information so its all up to you how to utilize this information. It important to keep in mind that credit monitoring isn’t an all-inclusive shield against identity theft and fraud.
Follow these tips to maximize the effectiveness of credit monitoring:
- Avoid Free Trials: Some credit-monitoring companies offer you free trials. They automatically enroll you in a monthly subscription once the trial is up. However, canceling these subscriptions are very difficult. They assume that whether you will give up of trying due to frustration or forgot to cancel them. Keep yourself away from these traps.
- Customise Your Notification Preferences: For credit monitoring to be effective, it customizes it according to your lifestyle. For example, if you check text messages more often than email, make sure your service of choice offers text alerts. The main purpose is to get information ASAP without the distractions of communication.
- Monitor Your Own Credit: According to the law, each consumer is entitled with the free copy of each of his or her credit reports in every 12 months. So with the help of this, you can do your own credit-report monitoring. Ordering one of your three major reports on a regular basis say every 4-5 months will enable you to regularly check your files. Checking helps you to keep such errors i.e. suspicious inquiries, accounts, and other activity away. Also, you should review your monthly credit card statements for unauthorized transactions.
- Apply a Credit Freeze for More Security: Legal bodies such as TransUnion, Experian and Equifax allows you to put a “lock” on your credit report. It means that no one except you would able to open a credit account in your name. It is a most aggressive step which you can take to protect your credit. But credit freeze may cost up to $10 per freeze for everyone else. The cost of freeze depends on your age, state of residence, military affiliation, and previous requests made by you.
Is Credit Monitoring Worth It?
In the market, there are many credit monitoring services which are giving free services. Credit Karma and Credit Sesame are two examples. But they also have some limitations. For example, Credit Karma only monitors Equifax and TransUnion report, whereas Credit Sesame monitors TransUnion exclusively. You may have to subscribe to several free services to get the full coverage. But still, it is advisable to not to depend too much on them.
Free credit monitoring companies also rarely give you a chance to stop identity fraud before it happens. Some of the paid services will actively monitor such types of activities. For example, if your name and social security number pop up on any sites, you’ll be notified. They also allow you to act quickly by freezing your credit reports or at least put in a fraud alert with the bureaus.
Lastly, some credit cards already provide a degree of credit monitoring and identity theft protection. They will help you to complete a police report or fill out any other government forms that may be required. You should contact your card issuer to see whether you have any such type of features or not before paying it to the third party.
Related Topic: Monitor your credit score