Credit Monitoring Services Explained

Credit CardsThere are three major credit reporting agencies that collect information about your payment history and credit accounts. This information is used to form your credit report and calculate your credit score. A good credit score opens the door to positive financial opportunities, such as better interest rates on future loans. A poor credit score can create difficulty getting future credit or loans and can even get in the way of obtaining a job in certain industries.

Credit monitoring services will watch your credit reports daily for a monthly fee. Some services will watch all three, while others will watch just one or two. If there are changes, they will alert you so that if there is unauthorized activity, you can catch it before too much damage is done.

How does credit monitoring work?

Since your credit report is being monitored, you will be notified almost immediately of any changes. The online services will typically email you within 24 hours of any change. You may also opt to receive notifications by phone or in the mail.

Credit monitoring companies watch your report for the following things: new accounts open in your name, late payments, bankruptcies, change in employer or address, or any inquiries made on your credit. If you receive notification of a change to your report that was not authorized, you need to contact the credit reporting agency immediately. Depending on what the change was, they will tell you the next step to take to correct it.

What are the benefits of credit monitoring?

One of the greatest benefits of credit monitoring is that it can notify you of fraud or identity theft quickly. Identity theft can often go undetected for long periods of time before the victim has any idea. The sooner you catch identity theft, the more likely you are to prevent severe damage and inconvenience.

If going through a divorce, break up, or similar situation, credit monitoring will help alert you if the other person has done anything that can impact your credit. Another person defaulting on shared loans or bills will damage your credit.

It is beneficial to monitor your credit for a while if you are preparing to take out a large loan or a mortgage. Monitoring your credit, especially if you use a service that sends you updated scores, can help you ensure that you will be able to get the best rates possible. Having a clean credit report and good credit score can save you thousands over the course of a loan.

A huge benefit of some services that offer credit score monitoring is insurance if fraud or identity theft is found. Insurance may cover losses and possibly lawyers. Many services will also offer to send you updated credit scores periodically.

Staying on top of your credit is vital for your financial well-being. You can monitor your credit yourself, but paying for a credit monitoring service takes the stress off of you and guarantees results!