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Credit monitoring can help you keep track of changes to your credit report, flag you when new activity occurs, and potentially apprise you of the first signs of fraud. While you can monitor your credit on your own, there are both free and paid services that can do all the legwork for you.
Here's what you need to know about credit monitoring and how it can make your life easier.
How Credit Monitoring Works
When you apply for and use credit, your creditors report your activity to the three national credit reporting agencies: Experian, Equifax and TransUnion. The reported information is collected and organized in three credit reports, one with each agency. Virtually every time you apply for or open a new credit account, pay your bills on time or miss a payment, file for bankruptcy and more, it usually shows up on your credit reports.
Credit monitoring services can help you keep an eye on certain updates that happen with your credit reports, including hard inquiries, new accounts, high credit card balances, missed payments and more. All of these activities can affect your credit scores in one way or another, and getting updates when they occur can help you respond more quickly and work toward maintaining a positive credit history.
What's more, they can be indicators of identity theft or a mistake by a creditor or credit reporting agency. That's especially the case when you didn't apply for credit or open a new account recently, and you've been paying all your bills on time.
What Credit Monitoring Does Not Do
Credit monitoring can do a lot to help you know where your credit stands at any given moment. But it's not a silver bullet to protect you from fraud or a guarantee that your credit will improve. More specifically, here's what not to expect a credit monitoring service to do for you:
- Stop phishing emails
- Keep your information safe from data breaches
- Keep someone from applying for credit in your name
- Alert you when someone applies for a job in your name
- Alert you when someone uses your information to open a utility account (unless the utility provider runs a hard inquiry)
- Report fraud to the authorities on your behalf
- Fix errors for you
- Set fraud alerts and credit freezes
- Do the work to improve your credit
Also, in a few cases, credit monitoring can overlap with identity theft protection services, but the two are separate.
Why Should I Monitor My Credit?
Keeping an eye on your credit is essential for many reasons. If you're not currently monitoring your credit, here are some benefits you stand to gain:
- It can help you improve your overall financial health. Your credit profile is a good indicator of your overall financial health, and practicing good credit habits can help you save money and work toward important financial goals. Credit monitoring can help you see which areas of your credit profile need to be addressed so you can stay on the right track.
- It can help you detect identity theft early. There's no surefire way to insulate yourself from identity theft completely, but good credit monitoring can help you spot signs, such as a new account or credit inquiry, before things get worse.
- It can help you spot inaccuracies. While it's not common, it's possible for a creditor or credit reporting agency to make a mistake and add erroneous information to one or more of your credit reports. As updates happen, credit monitoring can help you see these inaccuracies before they take a heavy toll on your credit scores.
- It can save you time. If you employ the help of a credit monitoring service, it can do the legwork for you, saving you time to spend on things you'd rather be doing.
Can I Monitor My Credit Myself?
It is possible to monitor your own credit without the help of credit monitoring services. However, it can be a time-consuming endeavor and isn't as effective as using a free or paid service. Consumers are allowed to access their credit report from each of the three credit reporting agencies every 12 months through AnnualCreditReport.com.
This means that instead of getting constant updates about what's going on with your credit reports, you'll only be able to check periodically—either all three reports at the same time once a year or one report every four months.
Also, you'll need to read through each report yourself and compare what you find with the previous year's report. And because of the way some tradelines are listed on your credit reports, it's possible you won't recognize a legitimate account right away and waste time verifying or disputing it.
As a result, it may be better to take advantage of a credit monitoring service, even if it's just a free one that doesn't provide the full spectrum of tools and resources.
How to Get the Most out of Credit Monitoring
If you decide to enlist the help of a credit monitoring service, here are some tips to help you make the most of what's available:
- Customize notifications. Credit monitoring services may send you all kinds of updates, and it's easy to get overwhelmed. To make sure you get only what you need, customize your notifications to focus on what you're specifically looking for, and to filter out what you don't care about.
- Don't get complacent. When you first sign up for a credit monitoring service, it can be extremely helpful to understand just how often your credit reports get updated. But over time, it can be easy to get complacent, especially if you never see anything suspicious. Avoid this temptation, however. Check each notification you get to make sure you stay on top of things.
- Act on suspicious changes. If you notice something inaccurate or potentially fraudulent, don't wait to act. Work with the creditor and credit reporting agencies to learn more about what's going on and address it, if necessary.
- Use a credit lock feature for the best protection. In addition to using credit monitoring, it's also helpful to take advantage of a credit lock feature, such as Experian CreditLock. These tools allow you to lock your credit file so identity thieves can't use it. If you ever need to apply for credit, you can quickly unlock it to give lenders access, then lock it again when you're done.
Shop Around to Get the Right Fit
There are several credit monitoring services out there to choose from, both free and paid. As you consider what you're looking for, take some time to compare different options to make sure you get the right fit.
It's especially important to get a service, such as Experian CreditWorksSM Premium, that provides credit monitoring for all three credit bureaus' credit reports. That way, you won't miss anything that shows up on one report and not the others.
While a paid service may sound unappealing at first, it's important to understand that you often get what you pay for with credit monitoring services. A free product may be enough for some people, but it may be worth it to pay for more comprehensive monitoring.