Earning and maintaining healthy credit can help you qualify for loans and competitive interest rates.
What is a credit monitoring service?
A credit monitoring service tracks your credit for any significant changes such as new accounts or a dramatic increase in your balances.
Credit monitoring doesn’t prevent identify theft, fraud or unauthorized use of your credit or identify, but it does report it so you can remedy the problem before there’s too much damage. Some services create personalized reports that recommend ways for you to improve your credit score.
Credit monitoring services typically charge a monthly fee, which could be as high as $600 per year. They review reports from one or all of the credit monitoring agencies and notify you of potentially fraudulent activity.
You also can monitor your credit for free and on your own, using many of the same tools that credit monitoring services use. If you want to monitor your credit on your own, especially if you fear you’re at risk for credit card fraud or identify theft, you can place a freeze on your credit, which prevents lenders from reviewing your credit, thus preventing the opening of new accounts.
Other ways to monitor your credit include requesting a free copy of your credit report, which you can order every year from each of the three credit bureaus. You also can set up automatic notifications through your credit card, bank or other financial institution to alert you of transactions made on your account, withdrawals, or purchases that exceed a specified amount, or other activity.
If you’re worried about your credit score, there are several ways to improve it, including these seven simple steps.
Credit monitoring example
If you’ve signed up for a credit monitoring service, the company regularly reviews your credit activity for anything suspicious, such as new accounts opened or large purchases made.
For example, if a new credit card is opened in your name, the credit monitoring service notes this when it reviews your file and alerts you to a potential red flag. Then, the company sends you a notification of the activity, and if you didn’t open the account, you’ll need to take steps yourself to report it to the authorities or take other action.