» How Credit Report Monitoring Works

How Credit Report Monitoring Works

May 26th, 2009, Written By: Kerri Randall

In these times especially, you want to make sure your credit is healthy, and the best way to do that is to pay your bills on time and keep your open balances low. But sometimes, someone else might get a hold of your personal information and start opening accounts and using your name and your credit for themselves, and you might not know about it until you go in to buy a new car or get a new credit card. A credit monitoring service can help you stay on top of changes in your credit report as soon as they happen.

We’re all advised to check our credit report at least once a year, and all three credit bureaus offer a free copy of your report. You can get them all at once or spread them throughout the year. The problem with this is that all of the credit bureaus do not report on all of your open accounts. If a fraudulent account has been opened with an inquiry to Trans Union but you only check your Experian credit report, you still won’t know until the damage has already been done, and this can cost you time and money and cause you to be denied when applying for loans. You’ll have to take the time to prove that your negative credit history is not your fault if you’re going to be approved.

When you sign up with a credit monitoring service, they can alert you daily or weekly to changes in your credit so you can take action right away. You’ll want to make sure that the service monitors your reports with all three bureaus so that all potential fraud can be caught. All three bureaus offer such a package, and that is the only one you want. You’ll also want to make sure that you will be alerted to small changes along with the big red flags, such as sudden activity in an account you don’t normally use, increases in your credit limits, small changes in current accounts, etc. If this is not automatically included, make sure you are offered the option to add it.

I am personally signed up with a service offered by my credit card that alerts me to such changes. In fact, I received a potential fraud notice when I changed my address, and I had to verify that it was me that authorized the update. Since I obviously knew I had done it, I ignored the alert, but they kept alerting me until I did something about it. While I found it slightly irritating, I prefer that to finding out that someone else had stolen and changed my information.

You can sign up for identity theft insurance, too. If fraudulent accounts are opened under your name, this insurance can reimburse you for all the costs associated with removing them, such as lost wages for time taken off of work to deal with the fraud, certified mail costs, long-distance fees, and even legal fees if your case goes that far. As always, read the fine print, as you might not be reimbursed for fraud that occurred before you signed up with the monitoring service.

You’ll have to pay a fee for a credit monitoring service, but it can be well worth it. You could start thinking it’s a waste of money if you’re always alerted to changes that you know you made and you never find evidence of fraud, but that means it’s working, and it’s saving you money, time, and your credit score.