What is credit monitoring (and should you do it)?

What is credit monitoring?

Credit monitoring is a type of service that helps people keep a close eye on their credit reports and credit scores to detect any unusual or potentially fraudulent activity. These types of services help you safeguard your financial identity and keep you informed about changes in your credit history. Credit monitoring services regularly check your credit reports from one or more of the major credit bureaus (Equifax, Experian, and TransUnion) and sift through information regarding your credit accounts, payment history, inquiries, and public records.

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Why do people use credit monitoring services?

Credit scores serve as an indicator of how you manage your money and are often looked at when you buy a home or take out a loan. Because of how important credit scores can be for financial decisions, many people rely on credit monitoring services to keep their credit scores stable. Here are some ways credit monitoring services can be useful:

• Alerts about changes: If any significant changes occur in your credit report, or if you get a hard inquiry from a lender, the credit monitoring service sends you alerts. These alerts can come in the form of emails, text messages, or notifications through a mobile app.
• Access to credit scores and reports: Many credit monitoring services will show you your credit scores, which can give you a sense of how to build credit over time. And, depending on the service, you may have the ability to access your credit reports from all three major credit bureaus, not just one. This comprehensive view of your credit history can be valuable.
• Identity theft protection: Some credit monitoring services offer identity theft protection features. These may include monitoring your personal information on the dark web, helping with identity theft resolution, and providing access to identity theft insurance.
• Credit report analysis: Credit monitoring services often provide tools and resources to help you understand your credit report and credit score. They may offer explanations of factors affecting your score and give you tips for improving your credit.

What are the downsides of using credit monitoring services?

While credit monitoring services can be useful, they can also be quite costly. The monthly fees can cost anywhere between $10 to $30, which may not be worth it for some people. Plus, credit monitoring services will not protect you from credit fraud and will only notify you once it has happened. Phishing scams and other forms of malware can compromise your financial details and greatly affect your credit score, and credit monitoring services aren’t able to stop them from occurring.

If you’re looking for ways to avoid the damage of malware attacks, the best thing you can do is download an antivirus software. Some identity monitoring services can also help you repair the damages from a credit card scam, which is helpful if your credit monitoring service is not able to.

How to monitor your credit information for free

Since paying for a credit monitoring service can set you back a few dollars each month, it can also help to take your own measures for keeping track of your credit changes. Some banks and financial services will provide you with free credit scores to allow you to check on your own. Plus, many credit monitoring services offer both free and paid versions so you can choose the level of monitoring that suits your needs and budget. You’re also entitled to a free annual credit report from each of the three major credit reporting agencies, so be sure to take advantage of that as well.

When pairing a credit monitoring service with good cyber hygiene, you can keep your private information secure. Find more privacy and safety tips to help you stay safe online.