Credit Monitoring

A credit monitoring is the tracking of changes in the borrower's financial behaviour to notify lending institutions of potential fraud as well as changes to their creditworthiness. For example, credit monitoring can guard you against identity theft, when an individual's personal information is stolen and used without the person's permission for vicious purposes. If a credit card is stolen and used, a credit monitoring will help to detect the different buying patterns by sending the alerts to the credit card holder.

Benefits of Credit Monitoring-

  • Helps in planning your finances well in advance

    Not managing and planning your finances can make things difficult in the long run. It is one of the biggest reasons behind a low credit score. A credit monitoring service will alert you about the changes to your credit score and this knowledge will help you in giving a better understanding of how your financial activities are affecting your score. It will also help you to make better financial decisions. Besides this, you will also be able to evaluate your credit health, all about your financial activities, identify the wrong areas, and how you can implement corrective measures.

  • It can help you to prevent identity theft

    Identity theft is a very serious problem that can easily go undetected if you don't pay close attention to it. The longer the fraud persists, the worse your credit report and credit score will get. To avoid such a situation, you can take the help of credit monitoring services to fix your credit with the credit reporting agencies in less time. To avail of this service, you would need to pay a few extra bucks to the credit monitoring companies to get such information.

  • You can customise alerts

    Some credit monitoring companies provide you with the comprehensive services. You can customise the reports, notifications, and alerts that you will receive. For example, you can choose to receive a notification whenever there's a particularly suspicious purchase on one of your credit cards, or if you're applying for any loan, they can send you information on the best rates depending on your financial requirement and condition.

Impact of Credit Monitoring on your Credit Score

Credit monitoring does not hurt your credit score. If a consumer access his/her own credit reports, it does not have any impact on their credit scores. Reviewing a credit report results in a “soft pull,” or “soft inquiry,” which means it will only be seen on a personal credit report. When a consumer applies for any kind of credit products such as loans or credit cards, the lender will review the applicant’s credit report, and a “hard inquiry” will be added. Hard inquiries are shown to other lenders because they may represent new debt that doesn’t yet show on a credit report as an account and it has an adverse impact on your credit score. Everyone should check their reports at least annually. It’s part of good credit management.

Bottom Line

Credit monitoring is important when it comes to staying on the top of your financial health. With this service, the possibility of credit fraud and identity theft is curtailed. You can easily check if any changes have occurred in your credit report or score and take remedial action on time.