What is credit monitoring?
According to the latest Consumer Sentinel from the Federal Trade Commission (FTC), about one in five Americans have lost money to identity theft, imposter scams and credit bureau fraud. That’s millions of people whose credit and finances have been targeted. But credit monitoring can help prevent this.
By routinely checking your credit and monitoring the changes that occur, you can safeguard your credit from these fraudsters. Let’s explore the ins and outs of credit monitoring, how credit monitoring services work and what steps you can take to protect your credit.
How does credit monitoring work?
Credit monitoring involves routinely checking the information that appears on your credit reports. This information can consist of:
- Credit accounts (i.e., credit cards and loans)
- Credit inquiries (when lenders check your credit after you apply for financing)
- Debts in collection
- Public records (i.e., bankruptcies)
Checking your credit includes information on all your accounts, both open and closed, including credit limits, account age and payment history. Credit monitoring offers a way to proactively manage your finances and get notified when inaccuracies, potential unauthorized activity or signs of identity theft appear on your reports.
Credit monitoring does not:
- Alert you to unauthorized bank withdrawals
- Block credit card skimming
- Correct credit report errors
- File fraud reports
- Initiate credit freezes
- Notify you of fraudulent tax returns or refund collection
- Prevent phishing attempts
- Prevent unauthorized credit applications or new account openings
- Secure your information
Still, without credit monitoring, you may not be able to take these actions or even know that you should.
According to the Consumer Financial Protection Bureau, “Checking your own credit report is not an inquiry about new credit, so it has no effect on your score.” Nonetheless, by routinely checking your credit report, you can make certain that the data credit reporting agencies provide to lenders is both precise and current.
Credit monitoring terms to know
Before you decide on your credit monitoring strategy, get to know some key terms:
- A credit monitoring service is a tool, app or website that constantly monitors your credit report and automatically alerts you to any changes or activity that could affect your credit score.
- Free credit monitoring refers to methods or services that enable credit monitoring at no cost.
- Paid credit monitoring is a credit monitoring method or service that charges a subscription fee.
- Tri-bureau credit monitoring looks at credit reports from all three credit bureaus.
- Single-bureau credit monitoring looks at a single credit report from one credit bureau, either Experian, Transunion or Equifax.
- A credit monitoring alert is a notification that informs you of any changes or suspicious activity detected in your credit report.
What are the benefits of using a credit monitoring service?
Monitoring your credit through a credit monitoring service is simple and automated. You don’t need to manually verify your information and pull your reports from each of the three credit bureaus every time you check your credit. Plus, you get access to other features the credit monitoring service may offer, such as
- Access to credit reports and scores
- Address change discovery
- Credit score change tracking
- Dark web monitoring
- Hard inquiry monitoring and alerts
- New account detection
- Potential fraud alerts
- Public records watch
These features help you stay proactive and keep you informed about any changes or threats to your credit profile in real-time. This proactive approach can help you quickly address errors on your credit reports and spot potential identity theft early.
How do you choose a credit monitoring service?
There are two types of two types of credit monitoring services: free and fee-based. Free credit monitoring services can be a perk with a bank account, credit card, identity theft insurance or other financial product.
Monitoring companies may try to sell you optional paid services to boost your credit, protect your identity and improve your financial health. Often, there may be a discount or free “basic” service with the option to upgrade to full-featured credit monitoring.
Here’s a quick overview of a few paid vs. free credit monitoring services.
| Service name | Best for | Summary of services | Cost | Credit bureaus reviewed |
|---|---|---|---|---|
| Experian free credit monitoring | Best for real-time alerts | Monthly updated credit report, credit report and account balance change alerts, FICO® Score 8 tracking, online credit report disputes, Experian Boost | $0 | Experian |
| CreditWise® from Capital One | Best free credit monitoring service | TransUnion credit report change alerts, dark web scanning, social security number tracking, VantageScore credit score simulator, weekly VantageScore update | $0 | Experian and TransUnion |
| IdentityForce® | Best paid credit monitoring service | Credit and fraud monitoring, dark web and social media identity monitoring, activity tracking, fraud/identity threat alerts, identity theft insurance, customer service options | Starts at $139.90 per year | Equifax, Experian and TransUnion |
As you can see from the above breakdown, paid credit monitoring services often provide premium features for protecting and repairing your credit, including access to all three credit bureaus. Free credit monitoring services give you more limited features.
Choosing the best credit monitoring service for you will depend on your goals, needs and budget. As you decide which credit monitoring service is best, consider factors like:
- Cost and affordability
- Credit bureaus monitored and credit scoring models used
- Features offered, such as real-time alerts and identity theft protection
- Reputation and customer reviews
Before committing to a service, ensure you fully understand the terms and offerings, especially with “free” credit monitoring. Before accepting a free offer, scrutinize it for hidden fees or cancelation prerequisites.
What other ways can you monitor and protect your credit?
In place of or along with credit monitoring services, you can request free credit reports from each bureau through AnnualCreditReport.com. From this source, free reports used to be accessible once per year. Now, you can access their reports once weekly at no cost.
The most accurate information about your credit reports will come directly from the credit bureaus — and this is where lenders are most likely to get their information when they make financial determinations. However, you may need to pay a fee to see your FICO credit score when you request it from TransUnion and Equifax.
Most banks and credit unions offer credit insights, whether it be a quick view of your credit score or full access to credit reports. You can take advantage of these services without any negative impact on your credit score. Note, however, that the information may not be updated in real time.
To defend your credit, you might also want to:
- Consider a credit freeze when heightened personal information security is a concern.
- Establish alerts on your credit cards to receive notifications for any charges made.
- Explore budgeting apps that offer complimentary credit score tracking services.
- Regularly review your online credit card statements, aiming for at least monthly checks.
- Review the activity in your bank and other financial accounts at least once per week.
- Use a credit repair company to help correct errors on your report.
- Use robust passwords and make sure they differ across your accounts.
If someone opens a credit account in your name, report the incident immediately and take any necessary steps to prevent it from happening again.
Next steps
No one wants to be the victim of fraud or identity theft. Credit monitoring is one way to safeguard yourself against identity theft and continue to make informed financial decisions. But knowing what your credit looks like right now is only the first step in maintaining overall credit health. Here are some next steps to consider.
- Continually monitor your credit: Don’t depend on credit alerts to keep you informed on all the changes to your credit. Regularly check your credit to ensure everything is on track.
- Add a credit monitoring service: Even if you already use a credit monitoring service, that service may only focus on one or two credit bureaus. Consider adding another credit monitoring service to cover all three credit bureaus.
- Address the issues you find: If there are errors or fraud on your credit reports, file disputes with the credit bureaus. Consider using a credit repair company if you need help navigating this process.
- Report fraud/identity theft: If you find suspicious activity on your credit reports, contact the credit bureaus and consider filing a police report. You may also consider freezing or locking your credit to protect further activity.
- Protect your credit: Set up credit monitoring alerts so that you are notified immediately of any changes to your credit. You can also consider utilizing identity theft protection services.
Billions are lost to fraud and identity theft each year. By following these credit monitoring steps, you can better protect yourself from becoming the next victim.
