Credit Monitoring: How It Works, Benefits of Credit Monitoring and More

What Is Credit Monitoring?

Credit monitoring, as the name suggests, monitors your credit. It tracks your credit history for any changes or suspicious activities. Credit monitoring services notify you of changes made to your credit reports to make you aware and take action against potential misuse of your personal information.

Benefits of Credit Monitoring

• Plan Your Finances Better

Poor financial planning can adversely affect your credit score and ruin your chances of getting better loans in the future.

Credit monitoring alerts you about the changes in your credit score. This helps you in understanding how your financial activities are impacting your credit score. Moreover, it helps you in evaluating your credit health and your financial activities, identifying areas where you are making financial mistakes and implementing corrective measures, thus leading to better financial decisions.

• Prevent Identity Theft

Identity theft is a serious problem, and if you don’t pay close attention, it can easily goes undetected. The longer it goes undetected, the worse it can affect your credit report and credit score.

Credit monitoring services can notify changes in your credit behaviour, so that you get a sense of a potential identify theft, instigating you to take appropriate action.

• Customise Alerts

Most credit monitoring companies provide comprehensive services, allowing you to customise the notifications, reports and alerts.

For example, you can choose to receive a notification whenever there’s a suspicious transaction on your credit card. Or, if you are planning to apply for a personal loan, you can ask for information about the best loan rates depending on your financial requirements and financial situation.

What Impact Does Credit Monitoring Have on Your Credit Score?

Credit monitoring is considered a “soft pull” or a “soft inquiry”, which does not hurt your credit score.

What Activities Do Credit Monitoring Services Report?

The credit monitoring services reports the following activities (the exact activity reported may vary from provider to provider):

• Hard inquiries on your credit report
• Balances and payments on your credit products
• Opening of new accounts in your name
• New address or name changes to your credit file
• Personal information on the dark web, such as your email address and passwords
• Public records, such as bankruptcies

What Credit Monitoring Doesn’t Do?

Some of the things the credit monitoring services do not do include:

• Keep your information safe from data breaches
• Stop someone from opening new accounts and applying for credit in your name
• Prevent your credit card from being skimmed
• Report fraud
• Informs you if someone makes a cash withdrawal from your bank account
• Freeze your credit
• Fix credit report errors