What is Credit Monitoring & How Does it Work?

lockUtilizing a credit monitoring service can be an excellent way of keeping tabs of your credit score & credit reports while making sure that there is no unauthorized activity taking place on any of your credit accounts. All credit monitoring agencies will provide you with regular reports on your credit activity, and can provide you with alerts if there are any suspicious activities such as newly opened accounts, a major decrease in your credit scores and unauthorized credit card activity. While there are many advantages to using one of the numerous monitoring companies, here are a few major reasons you might want to consider signing up in the near future:

1. You can regularly view your credit reports and credit scores, and in case of any major changes to your credit history or credit score, you will be able to address the issue before it grows into a major problem that negatively affects your credit score.

2. You don’t have to actively monitor your credit reports, as the monitoring service does this for you. You can usually set up various alert methods including text messaging, email and voicemail alerts in the case that a problem is noticed with your credit reports or scores.

3. While credit monitoring doesn’t necessarily prevent credit & identity theft, it gives you the peace of mind that if a problem arises, you will be notified and able to take action immediately. In the past, it could be months or more before something like this was noticed by the individual. Generally it wouldn’t be caught until a person applied for a loan or credit card and the institution pulled a credit report and noticed the problems. Credit monitoring takes the guessing game out of the equation.

4. With so many people doing banking and financial transactions online, the need to have your credit monitored is even greater. Criminals will stop at nothing to steal whatever personal financial information they can obtain, to open new lines of credit, make illegal purchases on your credit cards, and even take over your identity completely. When these crimes go undetected, your credit score will plummet, leaving you to sort through the mess, and responsible for any charges that the identity thief’s racked up on your credit.

Most credit monitoring companies will charge a monthly subscription fee, usually in the range of $15-$30 / month for your monitoring service. Nearly all of these services will send you an alert within 24 hours if they detect any credit record changes. You will also likely receive complimentary services such as regular access to your credit reports, and access to identity theft hotlines to assist in the event there are any problems. Additionally, most of the monitoring services on the market today offer some amount of identity theft insurance, where they will pay you if your identity is stolen while you’re using their program. Up to one million dollars in some cases and exclusions obviously apply.

Take a look at our top 10 credit monitoring companies and find the plan that’s right for your situation.