Credit Monitoring

Category: Finance

Your credit is one of your most important assets in this day and age. It's also vulnerable to identity theft; credit reporting errors; and simple misunderstandings that can damage your credit and adversely impact more than just your ability to borrow money. It's important to monitor your credit and correct any problems you can as quickly as possible. Here's how...

credit monitoring

Check Your Credit Report

A credit report is a compilation of your credit history compiled from data submitted by lenders with whom you have done business. Your credit history data is typically submitted to three major credit reporting agencies: TransUnion, EquiFax, and Experian. Many entities besides lenders check your credit report for various reasons.

You car, life, health, and liability insurance premiums are determined, in part, by your credit report. The insurers seem to have found that bad things don't happen as often to people with better credit reports, so they get lower premium payments. Employers often check your credit report as part of a background or reference check. Renting a house or apartment typically involves a credit report check; after all, you're borrowing a year's rent and promising to pay part of it each month. If something mars your credit report, your life can become very expensive and anxious.

Unfortunately, credit reporting errors are common and can have an adverse affect on you. You may pay more for insurance than you should, without even knowing it. You may have trouble getting a loan, securing employment or contracts for your business. You may see sudden hikes in the interest rates on your credits cards and mortgage. The police may even come inquiring about certain fraudulent transactions that you know nothing about.

Do You Need a Credit Monitoring Service?

The longer you have bad credit, the more time and trouble it takes to fix it. So you should monitor your credit report regularly and take immediate action to correct any errors in it that you can. For starters, you are entitled to a free credit report once a year.

U.S. law requires the three major credit reporting agencies to send you a written copy of your "credit file disclosure" (credit report) at least once a year. You can request this credit report at AnnualCreditReport.com, a site the credit agencies jointly operate. Be prepared, when you file your request, to be pressured to sign up for fee-based monthly credit reports and other credit monitoring and emergency services. The agencies try to make money while satisfying their legal responsibilities, but of course you're under no obligation to give them a penny.

Since there are three credit reporting agencies, and each will give you one free report per year, my advice is to request one report every four months, to keep tabs on your credit. But there are subscription-based credit monitoring services that let you check your credit report online, as often as daily if you really want. Some will send a written report monthly. Some will automatically take emergency measures to protect your credit if suspicious activity occurs on your credit history. For instance, a credit card you've registered will be frozen, unusable, if it suddenly appears to be buying thousands of dollars worth of electronic equipment hundreds of miles from your billing address. The monitoring agency will block further transactions and notify you via email, SMS message, voicemail, and/or snailmail. If your wallet is stolen or you believe someone is fraudulently using your identity and credit, one phone call will instruct the monitoring service to freeze all of your credit cards, and even bank accounts.

It may sound like a good idea to sign up for credit monitoring and emergency services. But some people argue that they can actually damage your credit. The theory is that credit reporting agencies may assume that frequent credit checks reflect your attempts to obtain more credit, so you must be in bad financial shape and about to default on your current debts. But since the credit reporting agencies themselves offer these monitoring services, I tend to think they are more benign in that respect.

On the downside, credit monitoring services can cost hundreds dollars a year, and they really don't give you much that you can't get for free or very inexpensively. Even if you've gotten your free annual credit reports, you can still purchase additional copies at any time for under $10. In my opinion, fee-based credit monitoring services are a poor investment, unless you've already been a victim of identity theft, and there's a real possibility that further damage might occur.

Do you have something to say about credit reports, or credit monitoring? Post your comment or question below...

 
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Most recent comments on "Credit Monitoring"

Posted by:

Skeptic
19 May 2010

I put a freeze on my accounts with all 3 credit agencies. Downside is that I will have to ask all 3 to lift the freeze if I ever need credit and it could take several days. Meantime, no one can access my information if I understand the freeze correctly.


Posted by:

Mark Jacobs
19 May 2010

One trick I used to use before the government mandated companies to give free credit reports was that I would apply for a credit line increase above reasonable expectations. The bank would naturally refuse and send me a letter saying I could get a free credit report. This should still work if you need an extra free credit report, although a $10 charge would be easier than having to go through all that.


Posted by:

Digital Artist
19 May 2010

While a subscription to periodic credit reports is probably a convenience, most of the time there will be nothing new or unexpected in the report so it is like last week's newspaper. Some state laws require the reporting agencies to provide more than one freebie a year (Georgia requires two a year) why not write your state legislature and demand a law like that in your state? Also the request for an unreasonable increase in a credit line is a way to get a freebie from ONE agency (the one the financial institution used to deny your application) My personal evaluation of credit reporting agencies is that they are on the same playing field as payday lenders, an industry taking money while providing nothing. Here is a good way to keep yourself safe: have all your financial accounts available online and look at all of them every couple of days. You will immediately see anything that is out of line, even stuff that a credit bureau would not notice.


Posted by:

writeman47
19 May 2010

I was offered two years of free credit monitoring as part of some class action court settlement. I've not had an identity theft issue (knock wood)but I've enjoyed watching my credit score bounce around a little bit every month. When they finally ask me to pay for it though, I'll politely decline. As a resident of Georgia, I'm entitled to two free credit reports annually from each of the three major players and that will be plenty.


Posted by:

Bayard J. Fox
20 May 2010

Unfortunately these free reports do not include one's credit score. That is by far the more useful and interesting piece of credit reporting that one can obtain. It used to be that Washington Mutual gave its credit card holders access to this number online as part of their web services but once Chase gobbled them up, this went away. Obtaining that number elsewhere costs about $20 per request which seems excessive for what is nothing more than an additional calculation based on what is already contained in the usual credit score data.

EDITOR'S NOTE: There are some free credit score options. See http://askbobrankin.com/free_credit_score.html


Posted by:

Karan
20 May 2010

I might just add that the advertisement on this page for a "free credit score" from creditreport.com is NOT free at all. Credit reports are easy to get .. most states require that folks be able to access theirs for free at least once a year. Credit SCORES or RATINGS are a different animal all together, and they're never free. If you click on the ad above, you'll be asked for all of your personal information including your SS#, birth date and a credit card number. The site IS secure, but this is one time when you should read the Terms and Conditions before clicking on "Continue to View Score". Not only the terms and conditions, but the small print just above the "Continue to View Score" button reads:

Click "Continue to View Score" to accept the Terms and Conditions, acknowledge receipt of our Privacy Notice and agree to its terms, and confirm your authorization for CreditReport.com to obtain your credit information, verify your identity, monitor your credit, and submit your secure order.

Basically, it's a sneaky way to get you to sign up for credit monitoring. You've given then your credit card number and even though above the credit entry info it says:

Your credit card will not be charged during the free trial period. However, valid credit card information is required to establish your account.

You caught that FREE TRIAL PERIOD part, right? I hate this kind of garbage. Someone who's feeling a bit squeezed might be interested in their credit score, bop through the entry fields and click on "Continue to View Score" without a second thought .. and before you know it, an already stressed individual is seeing monthly installments for a credit monitoring service.

Buyer beware, indeed.


Posted by:

DHFabian
20 May 2010

The nature of our credit records is toxic, and begs for significant reforms. When in my early 20s, starting out and uninsured, I incurred some huge medical bills, far beyond my ability to pay, and this effectively blocked me out of our economic system permanently. By the time the bills were behind me, I couldn't get credit because I had no credit history. Now in my 50's, I've never owned a home, a car, etc., and never will. No credit cards,so anything I buy must be paid in full at the time of purchase. Higher education was out of the question, ensuring I remained in low-paying jobs. In short, a single illness at the wrong time ensured that I would remain low-income for the rest of my life.


Posted by:

Helen Isensee
21 May 2010

I didn't know that my credit report would run 22 pages or that my credit score would only be available for an additional $7.95. I doubt if I'll ask for any more credit reports unless I have my good credit challenged.


Posted by:

Leandro B
29 Jul 2010

Most transactions can easily be done through online. This is a big help to every consumer who doesn't want to hassle with their business like for instance knowing your credit score. Learning your credit worthiness is easier now, as a result of the financial reform bill signed into law this month. Financial reform legislation, otherwise known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, calls for lenders to show you the credit reports they used to turn you down. But you can keep that from happening by knowing your credit score beforehand and taking steps toward credit repair. Credit Karma, along with others, make your credit score accessible at any time you would like to check it.

EDITOR'S NOTE: I wrote about Credit Karma here: http://askbobrankin.com/free_credit_score.html


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Article information: AskBobRankin -- Credit Monitoring (Posted: 19 May 2010)
Source: https://askbobrankin.com/credit_monitoring.html
Copyright © 2005 - Bob Rankin - All Rights Reserved