What is credit monitoring and how does it work?

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Credit monitoring is a service that keeps an eye on your credit reports and alerts you when there are changes.

According to the 2023 Identity Fraud Study, there were 15.4 million victims of identity theft in 2022. Research shows that the biggest financial impact of identity theft happens when a new account goes undetected for six months or longer. Credit monitoring helps you stay on top of your reports to spot fraudulent activity and errors as soon as they occur.

What is credit monitoring?

So, what is credit monitoring? It’s a service that watches your credit reports and alerts you about changes. Credit monitoring has many benefits, including ensuring your credit reports stay accurate.

Most people don’t make a regular habit of checking their credit reports. This can leave them vulnerable to identity fraud and credit report mistakes that go undetected for months or years. But with credit monitoring, you get an alert anytime there’s a major action on your account. For instance, your credit monitoring service will notify you if new credit is opened in your name or a hard inquiry occurs.

What’s involved in credit monitoring?

Credit monitoring keeps tabs on your credit reports and alerts you of any changes or suspicious activity. A credit monitoring service can watch for:

• Hard inquiries: When you apply for a loan or credit card, a hard inquiry appears on your report.
• New accounts: This applies to any type of credit account opened under your name, including loans, mortgages and credit cards.
• Changes to existing accounts: If you’re given a credit limit increase or your payment history is updated, it’ll appear on your credit report as a change.
• New public records like bankruptcies: If a bankruptcy occurs under your name, you’ll receive an alert.
• Address changes: When your address changes on any account or credit card, it shows up on your credit report.
• Credit score changes: Your credit monitoring service can keep you updated as your credit score fluctuates.

What are the limits of credit monitoring?

Credit monitoring doesn’t take action if it detects unusual activity on your credit report. Its purpose is to alert you of any changes so you don’t need to constantly monitor your credit. Credit monitoring is a protective measure because it can alert you of the typical signs someone is stealing your identity, but it doesn’t take any action to stop or prevent suspicious activity.

Once credit monitoring alerts you of any changes, you should investigate yourself to determine whether or not the activity is fraudulent. From there, you can take appropriate action.

Who provides credit monitoring?

Several types of companies offer credit monitoring services, although the costs and services vary from company to company.

• Banks and credit unions: A bank or credit union may offer to monitor your credit score and credit reports. The service may be free or have a fee.
• Personal finance apps: Many budgeting apps and personal finance websites offer credit monitoring services.
• Credit repair firms: A firm that works to repair your credit may also monitor your credit.
• Credit bureaus: The three major credit bureaus (Experian®, Equifax® and TransUnion®) offer credit monitoring packages.
• Security companies: Companies specializing in security may also include identity protection and credit monitoring.

As you consider different services, examine how and when they’ll notify you of any changes. The sooner you’re aware of an incident on your account, the quicker you can take action and prevent additional harm to your credit. 

What’s the difference between identity theft protection and credit monitoring?

Identity theft protection and credit monitoring serve similar purposes. However, the extent to which they search for your information differs:

What does identity theft protection search and report to you?	What does credit monitoring search and report to you?
Arrest records	Credit reports
Bank accounts	Loan requests
Credit card accounts	Hard credit checks
Credit reports	–
Personal information on the dark web	–
USPS change of address	–
Utility requests	–