With the advent of technology and the internet, a lot has changed. However, part of these changes has come with some challenges. As we continue to share our information online for various uses, we face the problem of identity theft. Scammers send messages to fool you to reveal your personal information including things like social security number, address, and so on.
The most common way through which scammers get your information is through credit reports. Therefore, these services come in handy to help protect you from these swindlers. These services closely monitor your credit report and send you alerts anytime there are alterations in your credit score. However, at this point, hackers have already stolen your information. In that case, these are reactionary efforts to protect you from further damage.
How does Credit monitoring help you?
Credit monitoring work is to alert users about new credit accounts opened using their information. That way, users can confirm whether the actions are legitimate or not. This comes at a fee but it is worth the investment. The objective is to protect your personal information from scammers. However, it is important to note that credit reporting is not the same as credit monitoring.
Whereas credit reporting details your credit history and makes it available to potential lenders, monitoring helps you track your credit records. Credit reporting agencies such as Experian, Equifax, and TransUnion provide your information to creditors when you apply for a loan. When you engage credit-monitoring services, you will get alerts of all changes happening in the reports as they happen.
Monitoring services can happen through these three credit-reporting companies or agencies. You will get a text or email alerts when there are changes in the following items:
- Accounts opened with your personal information
- Late loan repayments
- Inquiries from creditors
- Employment details such as employer
- Home address
- Application for bankruptcy
In all of the alerts, the opening of new credit accounts possess the biggest threat. Fixing fraud occasioned by a new account is difficult to fix compared to fraud from a standard credit card. This malicious activity is expensive to deal with and has a high potential of ruining your credit score.
Why use credit monitoring?
Credit monitoring has various financial benefits. Therefore, it is worth the investment to protect you from any form of fraud on your credit records. Here are key highlights of the benefits of using credit-monitoring services:
- Tracking your credit score. A good credit score guarantees access to credit and better interest rates on loans. That way, you will end up saving a lot from your borrowing. Therefore, you will need these services to exercise full control of your finances and stay afloat.
- Get an understanding of the factors that affect your credit score and ways to improve it over time. For instance, the services offered by Experian simulate the effect of new loans. Therefore, they help you make important decisions about your finances.
- They are educative on financial matters. Proponents of these services argue that it is worth paying for credit monitoring considering their educative nature to the users. The services keep you informed of your borrowing and spending habits. This alone is enough to boost your scores and help you save on your borrowing.
The downside of Credit Monitoring
Whereas credit-monitoring services notify you of any suspicious activity on your credit reports, they cannot protect against identity theft. Therefore, the claims by some of them that they are effective in safeguarding against identity theft are not true. In that case, they are reactionary measures to activities that have already taken place. Their objective is to stop any unlawful activity in good time and avert catastrophic damage.
Owing to these facts, credit monitoring has faced the following criticism:
- With credit monitoring, the services will alert you in case there is a new credit account opened in your name. However, they cannot initially protect you against the crime. Identity theft occurs through many channels. Scammers can get it from medical records and any other place where you have posted the information.
- Opponents of credit monitoring believe that consumers do not need a daily track of their credit score. This is especially due to the costs incurred to receive such services. For that reason, some people term it unnecessary especially because there is no financial gain for those frequent updates.
- Sometimes, it is not clear what credit monitoring companies use to determine your score. Therefore, users cannot easily assess any short-term fluctuations. In addition, you may skip important information due to the constant stream of alerts coming your way.
- The case of single-report credit monitoring, which happens in most cases is less effective. Access to credit monitoring from one agency and not the three credit reporting agencies limits their effectiveness.
- Consumers that are reluctant to engage in credit-monitoring services can do the tracking by themselves. Therefore, some people do not see the need to engage these services, especially on grounds of cost. Since they can access free credit reports, they can check the validity of their accounts and raise any concerns.
Over and above using credit-monitoring services, you can regularly check your credit card statements for any unauthorized purchases. However, credit-monitoring help is worth the cost in certain situations. This is particularly because most theft happens on a credit card. Therefore, as you do your monitoring using credit reports from authorized agencies, you may need help from experts.
The Bottom Line
Credit monitoring works by informing you about every activity posted in your credit report. Therefore, you can easily tell the accuracy of your reports almost instantly from the alerts you receive from these services. You get to know what you authorized and what you did not in good time and take the necessary action.
In that case, credit-monitoring services help to protect you from fraud. If not addressed in good time, fraudulent activities may damage your reputation and your credit score. Therefore, it is worth using credit monitoring for help with valuable information relating to your finances.