In today’s day and age and the digitally connected universe, everyone is at risk for identity theft and fraud. Having someone steal your identity or use your financial information in a fraudulent way can wreak havoc on your credit. Due to all of these risks, another industry was born — the credit monitoring industry. But what is credit monitoring and how can it help? Read on to learn more about how monitoring your credit can protect you and help you stay proactive.
What is Credit Monitoring?
Monitoring your credit is very much like it sounds. It’s the act of monitoring your credit for any changes or significant issues. But who monitors your credit? Well, there are various credit monitoring services out there that do this kind of work.
According to Investopedia, “A credit monitoring service tracks changes in borrower behavior to notify consumers of potential fraud, as well as changes to their creditworthiness. For example, monitoring services can guard against identity theft, when an individual’s personal information is stolen and used without the person’s permission for nefarious purposes. If a credit card is stolen and used, a credit monitoring service should detect the different buying patterns and alert the credit card account holder.”
So basically the credit monitoring service helps you keep tabs on your credit activity and any suspicious changes.
How Credit Monitoring Can Help
Each credit monitoring service may be different but in general, credit monitoring can help you with:
- New accounts created in your name
- Hard inquiries on your credit report
- Current balances on your credit cards
- All accounts in your name
- When your data has been at-risk or involved in a breach
I signed up for Credit Karma credit monitoring a few years ago. Each month, I get updates on my credit score, account balances, and periodically they check to make sure all of my accounts under my name are correct.
About two years ago, I got an email from Credit Karma saying that there was a new account and a hard inquiry on my name. looked into it and it appeared that there was an account for an Old Navy credit card created with my name and phone number.
At this point, I hadn’t been in an Old Navy in a decade so I knew it was a fraudster. Because I signed up for Credit Karma and got the email immediately, I called the number on the credit card account to report the fraud. Apparently, someone on the opposite side of the country opened this credit card with my name and info.
But with my swift action, I was able to cancel the credit card before any charges were made. It freaked me out but I was grateful for the quick notification and the ability to cancel and close the card before there were charges. I made sure to mention it was fraudulent so it was removed from my account and credit report.
Benefits of These Action Steps
If I hadn’t taken such swift action due to monitoring my credit:
- My credit score could have dropped from the hard inquiry
- There would be fraudulent charges on my credit card, which would affect the debt-to-income ratio, and in turn, could hurt my credit score
- If I didn’t realize it was fraud, I would have to pay for something I didn’t buy!
Ever since then, I’ve been a fan of monitoring. Of course, I still had to determine it was fraud and make the call but being notified about new accounts created in my name really helped. It’s also good for me to know about any big or small changes on my credit report.
Where You Can Go For Monitoring
As I mentioned, I used Credit Karma’s free credit monitoring service to help me avoid trouble and help stay on top of my accounts.
I also recommend people check their comprehensive credit report at AnnualCreditReport.com each year. While it’s not a credit monitoring service per se, you can see your credit reports at all three credit bureaus. You can look for any errors and make sure the information is correct.
Experian, one of the three credit bureaus, offers free credit monitoring as well. I recommend starting with free options. However, you should know other credit bureaus like TransUnion also offers paid credit monitoring that may offer additional support and resources.
Before opting for any paid services. Make sure you compare it to the free services available and understand what you’re paying for. You also want to check for consumer reviews as well.
It’s also important to note that monitoring doesn’t solve the larger issue of having your data get in the wrong hands. Nor does it fix your credit report or help you avoid phishing or other types of scams.
Monitoring should be a part of your financial strategy. You should also be proactive and watch out for spam emails, texts, and calls. Check your bank account daily for transactions as well as your credit cards. If that’s too much, try once a week.
Your financial information can get into the wrong hands at any time. That’s why being proactive and taking measures like signing up for monitoring can help.
As noted above, it won’t solve all of your problems or mitigate all of the risks related to fraud but it can provide you with important information to take action quickly. Consider signing up for a free monitoring service to see how you like it, while also keeping tabs on your bank accounts, purchases, and being vigilant with potential spam or phishing scams.