Credit Monitoring Services: All You Need to Know
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Credit fraud can happen to anyone, and the effects can be devastating.
Most of us know someone who’s had their personal information stolen and had it used to open new accounts or go on shopping sprees. Trying to recoup that money or have those accounts removed from credit reports is an exhausting, frustrating process.
Because there’s been an increase in exposed consumer information through data breaches and phishing scams, more companies are now offering credit monitoring services that can alert you to potential fraud and changes to your credit report. There are also ways you can monitor your credit report on your own.
What Is Credit Monitoring?
Credit monitoring is the process of reviewing your credit reports and credit scores to check for mistakes. It’s an opportunity to see if anything looks suspicious or identify evidence of fraud. The faster you find errors, the less damage you’ll get on your credit report.
You can do this yourself or sign up for a free or paid credit monitoring service.
Why Is Credit Monitoring Important?
Credit monitoring is important for a few reasons. Since your credit score plays a big role in the kind of loans and interest rates you qualify for, you want to make sure you’re doing what you can to improve it or keep it steady. Significant negative changes in your score can signal that something is wrong.
Your credit report will tell you who’s looking at your credit history. If you see hard inquiries on there that you don’t recognize, you can dig deeper and do some research to find out why. These can indicate fraud or identity theft, which may require immediate action to prevent further problems.
By monitoring your credit report, you can see inconsistencies or inaccuracies. Although each bureau calculates your score differently, most of the information should be the same.
For example, if your name is misspelled with a bureau, you want to get that fixed. Other common errors include applying someone else’s accounts to your report, accounts missing from your report, and accounts being reported twice.
If you notice any errors or suspicious activity, contact the bureau immediately and file a dispute. There are also other actions, like a credit freeze, that you can take while the problems are being investigated.
How to Monitor Your Own Credit
You can pay for a credit monitoring service, but it’s relatively simple to do it on your own.
Pull your credit report
Getting a copy of your credit report is the first step. You’re entitled to a free credit report from the three major credit bureaus (Equifax, Experian, and TransUnion) every 12 months. You can get your free credit report online at AnnualCreditReport.com. Regularly reviewing your information from the three major reporting bureaus can help you find errors.
Since you only get a free report once a year, you should receive the reports at different times of the year for a more comprehensive view of your activity. For instance, you may pull your Experian report in January, your TransUnion report in May, and your Equifax report in September.
As you review your credit history, look for any changes. Pay special attention to new information about your name, addresses, account information, credit inquiries, and delinquent payments.
Monitor your credit score with a free service
Since free access to your credit report only happens once a year, a free credit monitoring service can fill in the coverage gaps.
Getting a free account with Credit Karma or Credit.com can provide added protection against fraudulent activity. Plus, it provides access to your credit score as often as you want.
Improving your credit score is easy with a service like this. Frequent notifications keep you updated and informed of any possible threats.
Most credit card companies provide your credit score for free, and some will notify you of changes to your credit report. You might have to opt into that service, but it’s worth it if it’s free.
Consider a credit freeze
Restricting access to your credit report with a credit freeze makes it impossible for identity thieves to open new accounts in your name. A freeze won’t affect your credit score and is the best protection against fraud.
When you do this, potential new lenders won’t have access to your credit reports. Since credit card companies and lenders won’t open an account without checking your credit first, this can prevent thieves from opening any new accounts.
If you notice suspicious activity on your credit report, this will be your first line of defense against identity theft or fraud. A credit freeze isn’t permanent. Should you need access to your credit, the process to have the freeze lifted is pretty straightforward.
Free Credit Monitoring Tools
While manually monitoring your own credit is a good, cost-effective choice, there are some free credit monitoring tools you can use to supplement your efforts.
A free account with Credit Karma includes access to your credit score and a TransUnion credit report, both of which are available at any time.
Like other free credit monitoring services, checking your credit with Credit Karma doesn’t hurt your score. A graph shows how your credit score changes over time and how your score stacks up against others by age, income, and state.
If you’re wondering how paying down debt or opening a new credit card will affect your score, Credit Karma has a simulator tool for that. It will predict how different scenarios and circumstances could impact your credit rating and can help you create your debt payoff plan.
Credit Sesame provides a free service to manage your credit and protect vital financial information. You’ll see your credit usage, your payment history, the amount of debt you owe, and the number of inquiries placed against your report. You’ll also be able to easily view late payments or accounts in collections, foreclosures, and bankruptcies.
Credit Sesame provides automatic protections including alerts to changes in your credit score, when an account is opened or closed, or any recent inquiries if you apply for new credit.
They’ll also explain what factors impact your credit rating and give recommendations on how to improve your score. For instance, if you have a high credit utilization ratio because you’re using too much of your available credit, they have resources available to help you remedy the problem.
Not only will the app calculate your credit utilization ratio, it’ll also show you why it’s high and which account balances could be hurting you the most.
However, the best feature of Credit Sesame’s credit monitoring service is the $50,000 identity theft insurance policy that you’ll get for free when you sign up.
Related: DollarSprout’s Credit Sesame Review
Credit.com provides updates every 14 days from the credit bureau Experian. You’ll also get a Credit.com report card that shows your payment history, debt usage, and credit inquiries.
It’s free to use Credit.com. If you’re looking for information about credit repair, this site offers advice and strategies on improving your credit score as well as information on how to fix errors on your credit report.
There are no quick fixes when it comes to repairing your credit. However, having the resources and knowledge to do so can be extremely helpful.
Paid Credit Monitoring Services
Subscription-based credit monitoring services are easier and more efficient for most people. They automatically and continuously monitor your credit and notify you of any unusual or suspicious activity. It takes all of the manual work out of credit monitoring.
A paid subscription has perks that you don’t get with free services. If you’ve already been a victim of fraud, the extra protections that come with a paid service can help ease concerns about recurring issues.
Experian Credit Monitoring
Experian offers Experian CreditWorks Premium, a comprehensive credit monitoring service. Some of the key features include:
- Daily credit report check
- Credit score monitoring with all three bureaus
- Real-time notice of credit changes
- FICO score access every 30 days
- $1 million identity theft insurance
This service costs $24.99 per month, with an introductory offer of $4.99 for the first month. You can cancel at any time, so you’re not locked into a contract.
Experian also offers free and paid identity theft monitoring services for adults and children.
TransUnion Credit Monitoring
TransUnion offers a credit monitoring service that alerts you to changes in your credit score or if there are any inquiries on your report. You can also receive:
- Ability to lock and unlock credit reports from TransUnion and Equifax
- Unlimited credit score and report updates
- Up to $1 million in identity theft insurance and real-time notification of suspicious activity
This service will cost you $24.95 per month and can be accessed via the web or their app.
Other Paid Credit Monitoring Services
If you don’t want to use the credit monitoring services provided by the credit bureaus, you can choose from a number of independent companies including Identity Guard, Identity Force, and Privacy Guard.
When researching and picking a paid monitoring service, make sure to look at the annual cost, the ability to cancel, the strengths and weaknesses of their service, and user reviews. You want to pick one that fits your budget and needs.
Credit Monitoring Is Necessary for Everyone
Identity theft and credit fraud can happen to anyone. Make sure you’re monitoring your credit score and credit report regularly to look for anything irregular or suspicious.
You can do this yourself, use a free credit monitoring service, or buy a paid subscription. If you decide to monitor your credit yourself, take advantage of free credit monitoring services through sites like Credit Karma or Credit.com to help you keep an eye on things.
It’s easy to miss something through human error, and you don’t want to risk that happening to you.
For a more hands-off approach, or if you’ve already experienced identity theft, paying for credit monitoring might be the best option. You can find affordable plans to do the work for you.
Whichever route you choose, it’s important to be proactive with your credit monitoring.