Everything You Need to Know About Credit Monitoring

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At first glance, credit monitoring might seem complicated and unnecessary. But it’s surprisingly easy — and has huge payoffs.

When you keep an eye on your credit, you can watch for errors and any fraudulent activities like identity theft. As the fastest growing online crime in the United States, identity theft occurs every 79 seconds. That’s what makes credit monitoring so important — and not just when you’re traveling. You’ll be aware of suspicious activity and can stop it in its tracks. You’ll also have a pulse on your credit and financial standing.

Luckily, there are simple ways to set up credit monitoring. Putting a system in place now could save you lots of time, energy, and hassle down the road.

What is Credit Monitoring and Why is it Important?

Credit monitoring is a service that tracks the activity on your credit report and alerts you of any changes. For example, if you apply for a loan or mortgage, the lender will run a credit check. You’ll be notified by your credit monitoring service that a credit check is being done.

In the same way, if someone falsely uses your identity to apply for a credit card, you’ll be notified. Credit monitoring acts as an early warning system to let you know of any fraudulent activity or inaccuracies — usually within 24 hours.

Some credit monitoring services offer more comprehensive tracking, such as sending you notifications when your credit score changes.

By being in the loop on your credit changes, you reap a couple of big benefits.

First, you’ll be able to spot any fraudulent activity. Instead of finding out months or years later that someone has been using your identity, you’ll be alerted right away. According to research, identity theft that goes undetected longer than six months has the largest financial impact on the victim. That’s why it’s important to catch fraud early.

Second, you’ll know of changes to your creditworthiness. For instance, you’ll know if your credit score increases or decreases. These notifications can clue you into what’s boosting or harming your credit score — and help with your long-term planning. If you’re hoping to buy a home, for example, you’ll know if you need to boost your score before applying for a mortgage.

How to Get Free Credit Monitoring

Credit monitoring can be incredibly helpful, but it doesn’t have to be expensive. In fact, there are a couple of ways to get free credit monitoring. You can sign up for a service or monitor your credit yourself. Because these options are available at no cost, be sure to take advantage of them.

Financial institutions and credit card companies often provide free credit monitoring. When you register, provide them with basic information and tell them how you’d like to receive alerts — such as through text or email. You’ll receive alerts when there are changes to your account or credit history. Before signing up, read the details to ensure you won’t get charged any fees down the road. You can also read the company’s reviews or check with your local consumer protection agency to ensure the company can be trusted. If the free credit monitoring service isn’t enough for what you’re looking for, you can always upgrade.

Another option is to monitor your credit yourself. Each of the three main credit bureaus (Experian, TransUnion, and Equifax) provide you with a free credit report every year. If you spread out when you download your reports, you can review your credit for free every four months.

When you receive your credit report, review it for inaccuracies and fraudulent activity. You can see if anyone has applied for credit using your identity or if a lender has made a mistake. Take time to review your report thoroughly. It’s easier to dispute errors and fraudulent activity within the first six months of it occurring.

When to Pay for Credit Monitoring

Although there are options for free credit monitoring, some people opt to pay for the service. If you’re already a victim of identity theft or are at high risk for it — such as if your information was compromised — you may decide to pay for credit monitoring. Purchasing a more comprehensive credit monitoring service allows you to take further precaution in guarding against fraud.

You might also purchase a credit monitoring service if you know that you won’t monitor your credit yourself. Instead of taking the time to look at reports and alerts, you can delegate the task and ensure it gets done correctly. With a paid service, you’ll also get more comprehensive coverage, such as monitoring your bank account, credit card, and social security number. Sometimes the service will also include features like a credit score calculator, detailed credit analysis, and help with identity theft resolution.

The price and features of each service vary, so be sure to look through the details before signing up for a service.

Keeping tabs on your credit through credit monitoring helps you stay informed about your finances. You’ll be aware of any fraudulent activity or errors on your credit report. Credit monitoring also gives you a pulse on your creditworthiness — which ultimately impacts the types of loans and credit cards that you're eligible for.

Above all, it’s better to be proactive than reactive with your financial health. Rather than not knowing where your credit stands, opt to be in-the-know.


Consumer Financial Protection Bureau | Forbes | Investopedia