What is credit monitoring and what can it do for you?

As a whole, Americans seem to have become more aware of their credit activity over the last year. Prior to 2020, consumers added, on average, $45.6 billion in credit card debt per year. But during 2020 and the first quarter of 2021, consumers have collectively paid off nearly twice that – a whopping $82.1 billion, according to a WalletHub study.

However, as the “return to normalcy” moves forward and spending is also expected to return to its pre-pandemic norm, so too is the usage of our ever-beloved credit card.

Unfortunately, these days, that also means the likelihood of an increase in phishing, identity theft, fraud and more. There are a lot of online and phone scams to be wary of and, to be honest, it can be a bit stressful and even overwhelming.

So, what do we do? How do we protect ourselves from this kind of fraudulent activity?

Luckily, in addition to educating yourself about such scams and being aware of things like password protection, online security, etc., credit monitoring and credit monitoring services can be helpful tools to aid in your protection.

What is credit monitoring?

Magnifying glass

Credit monitoring is, essentially, tracking the activity of your credit bureaus. By looking at (or simply knowing) your credit history, patterns can be uncovered so that unusual or suspicious actions can be detected. New credit applications (also known as hard inquiries), new accounts, balances and payments, even name and address changes are all items that show up on your credit bureaus’ reports and can be effectively monitored.

What is a credit monitoring service?

Credit monitoring services, should you choose to use one, keep regular tabs on what’s going on with your credit bureaus and notify you of activity outside the norm. A missed payment, for example, when you have a long-time history of regular, on-time payments, could trigger an alert. As could a new account or a change of address, signaling potential identity theft or fraud.

While such alerts can be immensely helpful, credit monitoring is not the end-all, be-all in credit protection. It’s important to understand what a credit monitoring service cannot do.

What a credit monitoring service cannot do

Keep in mind, credit monitoring services provide an added layer of protection by alerting you to potential issues. They aren’t a replacement for shielding your private information or taking the necessary steps if and when something unfortunate does happen.

Do you need a credit monitoring service?

If you’re wondering if you should use a credit monitoring service, only you know the answer to that. If you don’t feel you have the time, energy, resources or knowledge to do it yourself, then you may want to consider one of the many available credit monitoring services to provide you peace of mind.

There are several free options. Some credit card companies offer them to customers and non-customers alike, and Experian offers a free service as well. In addition, federal law allows for you to receive a free credit report from each of the three bureaus once every 12 months.

For additional or more tailored services to better suit your needs, you can opt for a paid subscription. The cost of the paid subscriptions have a broad range, as do the services provided. Research is key, if you choose to go the route of a paid subscription, as you’ll want to ensure the service you choose has the features you need for a cost that fits your budget.

Which credit monitoring service is best?

This is a difficult question to answer because each credit monitoring service is different. Your needs likely vary from anyone else’s, so defining the “best” credit monitoring service really comes down to two things:
FICO credit score gauge
1. What do you need, or what expectations do you have, from the service?
2. How much can you afford, or are you willing to spend, on the service?

Once you have determined the answers to those questions, your search for a service that best suits your needs becomes narrower. And, something to keep in mind while doing your research is using a service that monitors all three bureaus. By monitoring all three, it’s less likely something will get missed because it appears on one bureau, but not the others.

If you are already quite experienced in this area and tend to keep a close eye on your credit bureaus anyway, one of the free services that provides some added protection may be exactly what you’re looking for and worth investigating.

Something else to keep in mind – through April 20, 2022, Experian, TransUnion and Equifax are offering all U.S. consumers free weekly credit reports through AnnualCreditReport.com to help protect financial health during the sudden and unprecedented hardships caused by COVID-19.

To learn more about improving your financial health, browse the resources across our Learning Center.

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