What Is Credit Monitoring? [Ultimate Guide for 2021]

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Your credit report contains a lot of important information, not just on your spending habits, but also highly personal information such as your full name, address, and Social Security Number. That is why it’s crucial that you monitor your credit report and credit accounts regularly. Or, just leave that up to the monitoring services. If you don’t know what they are, no worries! Continue reading to find out what is credit monitoring, what it does, as well as how free monitoring services compare to those requiring a membership fee.

What Is a Credit Monitoring Service?

Credit monitoring is a service that notifies you as a consumer of any changes made on your credit reports, such as potential fraud, misuse of personal information, or change of creditworthiness (so you can work on improving your credit score ASAP). This is a great option for people who have already been victims of fraud or just want to stay safe and on top of their credit reports at all times. Without credit monitoring tools it would be very difficult to spot any potential fraud in time before it lowers your credit score and steals your personal information.

DID YOU KNOW: Credit card fraud is the most common type of identity theft. According to the Consumer Sentinel Network Data Book for 2019 the FTC received over 271,000 reports on information misuse pertaining to existing credit card accounts.

How Does Credit Monitoring Work?

So, what is credit monitoring in practice and how does it work? Credit monitoring tracks a person’s credit file, which consists of all the data credit reporting agencies have collected regarding your credit. It also includes your personal information such as name and surname, previous and current addresses, and Social Security number. That is why it’s important to keep track of the information on these files and to be aware of any sudden changes. These are some of the most common activities that might alert the credit monitoring system about potential misuse:

Hard Inquiries

A hard inquiry happens when you apply for a new line of credit, e.g. a credit card or a loan. Hard inquiries show that a creditor wants to inspect your credit file in order to determine your creditworthiness as a potential borrower.

New Accounts

Information from credit files is used when a person wants to open a new account, whether it is a credit card or an application for a loan.

Payments and Balances

Payments that are out of the ordinary as well as significant dips in your account’s balance are triggers for credit monitoring services.

Changes of Addresses or Names

Any changes made to your existing accounts, such as adding a new address or changing the name of the account holder, are significant.

Public Records

Credit monitoring also takes a look at all of your public records and the information that they disclose.

Personal Information on the Dark Web

Your information could find its way onto the dark web. The personal data that is most likely to be leaked is your Social Security number, passwords, and email accounts.

What Isn’t Included in Credit Monitoring

Now that you know what is a credit monitoring service, you should also know what it isn’t. Although monitoring services track every unusual activity on your account, there are several services that are not included in credit monitoring such as:

  • Stopping a person from opening accounts in your name or applying for a new line of credit
  • Alerting you when someone withdraws money from your account
  • Preventing credit card skimming
  • Notifying you when a person files a tax return using your full name and collects the refund
  • Fixing any credit report errors
  • Reporting potential fraud
  • Stopping your email address from receiving phishing emails
  • Freezing credit

DID YOU KNOW: Some credit monitoring companies offer identity theft monitoring, but if you’re after a free credit monitoring service this will most probably not be included in the free services. If so, check out the go-to identity theft protection you can add to your free credit monitoring.

Who Should Use a Credit Monitoring Service?

Credit monitoring agencies are a great preventative tool for all possible misuse of your credit file and the information connected to it, as well as detecting errors on your credit report before it’s too late. That is why it’s recommended that everyone use a credit monitoring service, or at least routinely check up on their credit reports for any unusual activity. However, credit monitoring is especially crucial for someone who has been a victim of fraud before since their information is vulnerable.

DID YOU KNOW: The US holds the record for most reported credit card fraud cases. More specifically, 46% of the world’s credit card fraud happens in the United States.

Key Takeaways

Credit monitoring notifies you of any changes made on your credit reports such as potential fraud, misuse of personal information, or change of creditworthiness.
So, what is credit monitoring exactly? Credit monitoring tracks a person’s credit file, i.e. the file consisting of all the data credit reporting agencies have collected regarding your credit.
Credit monitoring checks for new accounts, public records, hard inquiries, changes of addresses or names, as well as information found on the dark web.
Credit monitoring only alerts you of potential misuse or errors on your credit file, but it does not take action against it.
Credit monitoring is a crucial step for anyone who has been a victim of fraud before because their information is more vulnerable.

Free vs Paid Credit Monitoring Service

If you’re just starting to look into credit monitoring as a prevention for potential credit card fraud, then you should know that there are both paid and free credit monitoring services. Both services have their fair share of differences, from price to monitoring accuracy. Here are a few of these aspects explained in detail:

Cost

While free monitoring services are in fact, free, the paid monitoring services tend to range from $10 to around $30 per month. Of course, the price depends on the monitoring service, and what type of services you will use with them.

Number of Credit Reports You’re Allowed to Access

Certain free credit monitoring services don’t take into account all three credit bureaus. So, what you’re getting is just a summary from one or two credit reports, instead of all three. Paid credit monitoring on the other hand is required to take all three reports into consideration.

Ease of Use

Free monitoring might be a bit confusing to use for some, as there are different sites that offer different types of services. In addition, some of the reports will be up to you to monitor on your own, which defeats the whole purpose of credit monitoring agencies. Paid services, on the other hand, make the whole process a lot smoother and easier to manage.

Identity Theft Insurance

Free services rarely offer identity theft insurance. Paid services, on the other hand, usually offer identity theft insurance up to $1 million.

DID YOU KNOW: By using a credit monitoring company you can find out what affects your credit score. Not only can you rest assured that your credit file is being safeguarded, but you also get insight into your own spending and paying habits.

Ways to Protect Yourself from Fraud

There are multiple additional ways to ensure your credit file security. Even though credit monitoring does have a big impact on securing your personal information from being taken advantage of, there are still other steps you can personally take if you want to know how to monitor your credit successfully, such as:

Freezing Credit Reports

Freezing your credit report ensures that all the reports you have are not open to access and no other new accounts can be open using your name. This has to be done with each of the three credit reporting agencies and you can do this completely free of charge.

Monitoring Your Credit via Credit Reports

While on the topic of credit reporting agencies, you should make it a habit to check your credit reports regularly for any unusual activities as a way of your own credit report monitoring. Currently, you have the possibility to receive free weekly credit reports from all three credit agencies, TransUnion, Equifax, and Experian, on AnnualCreditReport.com, due to the pandemic. This offer lasts until April 2022, so make sure to take full advantage of this opportunity. Otherwise, you get one free yearly credit report from each credit bureau.

Avoid Spam Emails (and Phishing Emails)

Your inbox may be bombarded by what appears to be great offers and limited deals, but most of it is in fact just a way to steal your personal information if you end up clicking on the links they send. Phishing emails are very common and everyone can be a target. So, always make sure you filter through the emails you receive before opening them.

DID YOU KNOW: According to the FBI’s 2019 IC3 Report on cybercrime, US citizens lost a total of $3.5 billion to cybercrime, with phishing emails being the most common form of crime. Phishing affected a total of 114,702 victims.

Top 5 Monitoring Services

It’s important that you choose the right credit monitoring company for your needs and one that will not charge you for more than its service’s worth. That is why we’ve compiled a list of the top 5 monitoring services, and what they offer for their price.

Credit Sesame

Credit Sesame first opened its doors in 2010 and has since been an advocate for consumers and a great place where users can get information about their credit reports.

Features

Credit Sesame offers a credit monitoring service that gives you real-time alerts if any important changes are made to your TransUnion credit report or if any alarming activity is noticed.

Pricing

On this credit monitoring services comparison list, Credit Sesame’s monitoring service is the only one that’s completely free. It does not require any credit card information and you can sign up in just a few easy steps.

Pros
  • Fast access to your credit score
  • Real-time alerts
  • Completely free
Cons
  • Uses only TransUnion reports
  • Looks at VantageScore instead of FICO

You can read the full review of Credit Sesame here.

Credit Sesame’s free credit monitoring system is a great choice for anyone who wants to keep tabs on their credit file and make sure everything is up to date without paying a monthly fee. With Credit Sesame, you can easily detect any errors made on your TransUnion report and have the opportunity to take action immediately.

IdentityForce

According to IdentityForce, they have a 100% success rate of restoring stolen identities as well as an excellent Net Promoter Score of 79.

Features

IdentityForce offers both credit score monitoring services and identity theft prevention services. In addition to the usual credit monitoring features, you also get access to social media identity monitoring, public record monitoring, dark web monitoring, and investment account alerts.

Pricing

IdentityForce’s all-inclusive UltraSecure Plan costs $17.95/month or $179.50 a year.

Pros
  • Free trial
  • $1 million in identity theft insurance
  • Monitoring of all three credit bureaus
Cons
  • Costly membership
  • Buggy credit monitoring app

With IdentityForce’s Ultra Secure Plan you can rest assured that all of your accounts will be monitored for any potential malicious activity or sudden changes made to your personal information.

PrivacyGuard

PrivacyGuard’s monitoring service has topped many lists of the best credit monitoring service picks and has thousands of satisfied customers.

Features

PrivacyGuard’s credit monitoring service reviews your credit file and makes sure to check all databases (as well as the dark web) for your personal information. They will then alert you of any findings and potential fraudulent actions.

Pricing

Pricing plans vary from $9.99 to $24.99 per month depending on the services included.

Pros
  • $1 million in identity theft insurance
  • Monitoring of all three credit bureaus
  • $1 per day for a 14-day trial
Cons
  • Uses VantageScore instead of FICO
  • All-inclusive plans are more expensive

If you don’t mind paying a bit of a higher membership fee, PrivacyGuard’s all-inclusive Total Protection plan will make sure that all of your accounts stay safe and guarded. With guaranteed identity theft insurance, up to $1 million of your expenses will be covered.

ID Watchdog

ID Watchdog’s services are highly rated and the A+ rating from the Better Business Bureau is further proof of that.

Features

ID Watchdog certainly deserves its place on our list of top credit monitoring services. ID Watchdog offers credit monitoring from all three credit reporting agencies, customized identity monitoring of the dark web, alerts on any address changes, credit loans, etc. It also offers identity theft insurance of up to $1 million.

Pricing

ID Watchdog’s Platinum Plan comes at $19.95/mo or for $18.25/mo if you sign up for a yearly plan.

Pros
  • $1 million in identity theft insurance
  • Monitoring of all three credit bureaus
  • Dark web scan
Cons
  • Computer security tools not included
  • No free trial

With an A+ rating from the Better Business Bureau, ID Watchdog is a certified ticket to a safe credit file. Their services encompass everything from dark web scans to monitoring your credit loans, all to ensure that your information will stay right where it needs to be.

Complete ID

Complete ID is owned by Experian, one of the three credit bureaus, and it’s a service that will definitely offer reliable credit report monitoring.

Features

Another of the top credit monitoring services is Complete ID. With Complete ID monitoring, you will get all the essential credit monitoring features as well as dark web monitoring. In addition, their plans offer up to $1 million in insurance coverage, plus dedicated support in case of identity theft.

Pricing

Complete ID membership costs $8.99/month for Executive members and $13.99/month per person if you’re a Business or Gold Star member.

Pros
  • $1 million in identity theft insurance
  • Monitoring of all three credit bureaus
  • 24/7 customer support
Cons
  • No text message alerts
  • Poor website interface

Complete ID offers great services for a very low monthly membership fee that covers more than enough of your account’s security. And with 24/7 customer support, you’ll be sure to get immediate answers to all your questions.

Conclusion

Credit monitoring services track your credit files and alert you of any changes made to them, such as the opening of new accounts, changes of names or addresses, hard inquiries, etc. They help keep your credit accounts and reports in check enabling you to react fast if there’s any fraudulent action. Both free and paid credit monitoring is available, but the paid options offer better services.

FAQ

What are the benefits of credit monitoring?

With credit monitoring, you will get accurate information on your credit report, lower the possibility of fraud and identity theft occurring without your knowledge, and get alerts on any new activity on your credit report, including any negative information.

What is the primary purpose of credit monitoring services?

What is credit monitoring and why do people get these services? Its main advantage is that it notifies you of any changes made on your credit reports such as potential fraud, misuse of personal information, or change of creditworthiness.

ABOUT AUTHOR

I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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