What is credit monitoring and how does it work?

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

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.

Credit monitoring is a service that keeps an eye on your credit reports and alerts you when there are changes. For instance, your credit monitoring service will notify you if new credit is opened in your name or a hard inquiry occurs.

Is credit monitoring worth it? Consider this: Your credit score significantly impacts whether you can get approved for a loan, mortgage or credit card. Credit monitoring is an easy, convenient way to ensure your credit report is accurate and your credit stays as healthy as possible.

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?

There are several types of companies that offer credit monitoring services, although the costs and services vary from company to company.

• Banks: From local banks to national brands, a bank may offer to monitor your credit score and credit reports.
• Credit unions: Credit unions may provide a free credit monitoring service with your account, or they may charge 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 keep an eye on 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.

Depending on the company, notifications will come to you in different ways and at different intervals. Some send you a push notification within 24 hours of a new item or change on your report.

As you consider different services, make sure you look at how and when they will notify you of any changes. The sooner you’re aware of an incident on your account, the quicker you can take action and prevent harm to your credit and finances.

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	–

Some identity theft protection includes insurance, which will help recover costs if your identity is stolen. Depending on your provider, it may also take action automatically to prevent identity theft. On the other hand, credit monitoring simply alerts you so you can investigate suspicious activity yourself.

How can I choose the best credit monitoring service?

In many cases, banks and credit unions offer a credit monitoring service for free if you’re a member, but sometimes you’ll have to pay a fee. Companies offer different services and levels of monitoring at different price points. Compare what each service offers to see what’s best for you.

Here are the main things to consider when choosing a credit monitoring service:

• Services provided: Some companies offer basic monitoring of your credit reports, while others offer Social Security number monitoring, identity theft protection and lost-wallet protection.
• Your needs: Determine the level of protection you want and need. If you’ve been a victim of identity theft, you may want a higher level of service. If you haven’t had any problems and are vigilant about staying on top of your credit report, you may not want to pay for extra services.
• Time saved: Having a service watch your credit can save you time that you can dedicate to other things. Keeping tabs on your credit report yourself takes effort and can cost money (beyond the free credit reports you can get each year).
• Cost: There are various price ranges for each service and company. Compare costs to see what fits into your budget.

Do I need to use these services to stay safe?

You aren’t required to use a service to monitor your credit—it’s something you can do yourself. That said, a credit monitoring service can save you time and money and alert you to fraudulent activity much faster. It’s nice to know there’s an extra set of eyes on your accounts.

For example, if you’re notified that someone applied for credit under your name, you can dispute it right away. But remember that credit monitoring can’t stop these incidents from happening.

How can I take advantage of everything credit monitoring offers?

Credit monitoring can do a lot of great things for your credit report and financial well-being if you know how to maximize its features.

Take full advantage of your credit monitoring service by:

• Tailoring your notification preferences
• Understanding how credit freezes work
• Reading each alert thoroughly
• Knowing what to do when suspicious activity occurs
• Learning how to dispute an error on your report
• Reviewing your service plan annually to see if you want to make changes

What should I do when I’m alerted of suspicious activity?

Suspicious activity can be caused by many different things, including a negligent clerical error or intentional identity theft. You won’t know until you investigate the item by double-checking to ensure it’s not just a purchase you forgot about and contact your credit company to rule out a mistake on their end.

If you determine your identity has been stolen:

1. Contact the credit bureaus and financial institutions involved.
2. File a police report. (You may need this later to share with your credit provider.)
3. Place a fraud alert on your report with a credit reporting agency. (Any agency will alert the rest on your behalf.)
4. Freeze your credit with all three major credit reporting agencies. (They will not alert the others on your behalf.)
5. Report your identity theft to the FTC.
6. Follow the recommendations of your personalized FTC recovery plan.

Frequently asked questions

Why is credit monitoring important?

Credit monitoring is important because it helps you catch identity theft or inaccuracies on your credit report faster. Catching these issues early makes them much easier to resolve and reduces the potential negative effects on your credit.

Should I enable credit monitoring?

In most cases, credit monitoring can be helpful. If the service is free, you should consider taking advantage of it. If the service is paid and you’re consistent with checking your reports yourself, then it may not be necessary.

What are the cons of credit monitoring?

There really isn’t a downside to credit monitoring services, especially because they tend to be low cost or free. However, not all providers have the same level of protection, so review what’s covered and included carefully.

Are credit monitoring services free?

Some banks or creditors will provide limited credit monitoring services for free. Lex OnTrack provides credit monitoring and other identity theft prevention services to help protect your identity and finances.

Does credit monitoring affect credit score?

Credit monitoring has no effect on your credit score. Credit monitoring uses soft inquiries to see how your score changes, so there are no consequences of credit monitoring itself. However, if credit monitoring helps you build better habits, then it could help you improve your score. Lexington Law Firm offers a comprehensive credit monitoring service that focuses on tracking your credit, protecting your identity and helping you fix issues. Additional benefits of our program include identity theft insurance and a personal finance manager. If you’re interested in learning more about how our credit monitoring program can benefit you, reach out to Lexington Law.

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