Why Monitor Your Credit?
Many consumers only think about their credit score when it’s time to apply for a loan, mortgage, or credit card. Still, a lot can happen in the months or years between your credit applications - and it’s vital to keep an eye on your credit score to protect yourself from fraud.
- Every US resident is entitled to a free annual credit report - and you’ll be doing yourself a huge favor by applying for yours each year.
- While an annual report is extremely useful it still won’t alert you to changes in your credit history that take place on a daily, weekly, or monthly basis.
- Credit monitoring provides regular tracking and alerting that’ll bring suspicious activity to your attention and give you the opportunity to take action.
What Are The Benefits Of Credit Monitoring Services?
Keeping an eye on your credit accounts is essential in the age of data breaches. Here are some of the benefits of using a credit monitoring service.
- Personal Security - If someone applies for a credit account fraudulently using your personal details it’s a sign that your privacy has been severely compromised. Receiving early warning of an event like this will buy you time to report it to the credit bureaus, the lender involved in the application, and law enforcement authorities.
- Maintaining Your Credit Score - Fraudulent credit applications in your name can result in the skipped payments and defaults on those accounts being reported to the credit bureaus. Your credit utilization will also increase substantially - and all of these factors can cause your FICO score to plummet.
How To Monitor Your Credit
If you’ve been a victim of identity theft or fraud in the past - or if your bank or credit provider has contacted you to inform you that your details have been leaked - you’ll definitely want to consider credit monitoring as an option.
- There are two main types of service providers in the monitoring industry: the three main credit bureaus and third-party credit tracking companies.
- The fees involved usually come to an average of $30 per month with some providers charging more or less than this amount depending on how comprehensive their service offering is.
- A monitoring service may be ideal if you’re not keen to freeze your credit report or if you’d prefer to let a third party professional handle your credit monitoring needs.
Why It’s Best To Avoid Credit Bureau Services?
The three main credit bureaus (Experian, TransUnion, and Equifax) all offer credit monitoring services - but it may not be wise to opt-in.
- When you sign up for monitoring services with a credit bureau you’ll usually find an arbitration clause in the service agreement. This means you’ll be waiving your right to a class-action lawsuit and will have to agree to binding arbitration. This may not be beneficial from a legal standpoint.
- In terms of the services offered by the three bureaus, you may find that other identity protection companies offer more comprehensive monitoring and added services for the same monthly fee or less.
Am I Eligible For Free Credit Monitoring?
If you’re interested in protecting your personal data and securing your creditworthiness, you may be wondering if you qualify for free credit monitoring. There are two broad categories of consumers who may be able to receive this service free of charge.
- Victims Of A Credit Breach - The 2017 Equifax breach affected millions of US consumers. If you’re a Capital One client your personal data may also have been leaked in 2019. Both of these institutions are offering free credit monitoring as a form of compensation.
- Clients Of A Bank That Offers Free Monitoring - As data leaks become more common, there are a number of financial institutions that offer free credit monitoring services. Ask your bank or credit card provider if they offer a similar free product.
Credit monitoring services provide you with added peace of mind by tracking all new credit applications and other changes to your credit profile on a constant basis.
We recommend that you avoid opting for the bureaus’ services because they usually involve a waiver of your rights and may not offer the best value. You may also qualify for free monitoring if you were the victim of a data leak or through your financial institution.