How Does Credit Monitoring Work: Identity Protection 411
Credit monitoring alerts you when there is a change that is made to one of your credit reports. This service gives you the opportunity to confirm the accuracy of the change and sort out any problems before it can become a bigger issue. Any suspicious credit report change can indicate fraud. Credit reports can contain errors that may cause a loan application to be rejected by a lender.
There are even more threats to your personal information and data breaches have gone up 500% in the past decade.
What Does Credit Monitoring Do?
The specifics of it will depend on the provider you choose but generally, services will notify you within 24 hours of a change being made to the credit report. You can get these notifications via email, text, or phone call, depending on your preferences.
Alerts
There are different activities that credit monitoring services will alert you to.
If you did not authorize any of the activities then you should be under the assumption that there is a fraud.
Who Offers Credit Monitoring Services?
There are some companies that offer both credit monitoring and identity theft protection services. Examples include IDShield and LifeLock. The service charges range from $10 to $30 a month and some are even more. Other companies will offer it for free, along with showing you your credit score, but services are limited.
Credit Monitoring Tips
While a credit monitoring service provides information to you in a timely manner, it is up to you to put this information to use. Monitoring won’t be an all-inclusive shield against fraud and identity theft. You should use it as part of a broad protection plan. There are other things you can do to help increase the effectiveness of your monitoring service.
Tailor Your Notifications
In order for you to maximize monitoring, it needs to complement your organizational and lifestyle preferences. For example, if you don’t check your email very often then you need a service that gives you a text alert. The goal with monitoring is to give you important information quickly so you need to make sure you are getting it.
Act on the Suspicious Changes
Procrastination defeats the purpose of credit monitoring so you need to act on any important notifications sooner rather than later.
Monitor Your Own Credit
You are entitled to a free copy of your credit report every 12 months. You can do your own monitoring this way by ordering one from the three major reports every four months. This allows you to check for any suspicious activity, accounts, or inquiries. You should also always be reviewing your monthly credit card statements for unauthorized transactions that may appear.
Apply a Credit Freeze
The major credit bureaus allow you to put a lock on your credit report. This will prevent unauthorized access and make it impossible for any fraudster to open new accounts with your name and identity. This credit freeze can be free if you have been a victim of identity theft but there can be a fee for everyone else. The cost will depend on where you live, as well as your military affiliation, age, and whether or not you have made any previous request.
Should You Have Credit Monitoring?
If your data has been compromised, it doesn’t mean that thieves have used your information yet but you may qualify for free credit monitoring. Taking advantage of this free service can be helpful.
You should pay for these monitoring services if you have been a victim of identity theft or are already at a higher risk of it. It also makes sense to pay for it if you don’t want to freeze your credit accounts. If you are busy and know you won’t be able to monitor or freeze your credit then paying for it can be a good option.
While you can do this on your own, unless you are depending on the service to do it for you, it’s something that you need to be diligent about. It can be easy for your check credit report reminders to slip to the bottom of the to-do list with everything else that is going on. People are busy but everyone can be a victim of credit fraud. Unless you can stay on top of it, you may consider these services.
Benefits of Credit Monitoring
There are a lot of benefits that you should be aware of.
Personal Security
The main reason to have these services is personal security. For example, you wouldn’t just leave a bag full of cash in an unfamiliar place for an extended period of time so there should be some importance to keep an eye on your credit. With the right service, you have the opportunity to recognize questionable and unfamiliar credit activity before someone else may even realize something is wrong.
When you take this proactive approach, you can ensure your credit report is accurate and fix issues before too much damage is done.
Credit Monitoring Can Help Optimize Your Credit Score
The higher your credit score, the more likely you are to repay the loan, which means you get rewarded with a lower interest rate. This means lower monthly payments and less interest. Credit monitoring can help you make sure you don’t have any fraudulent activity or errors on your report that could lower your score. If you do have any issues then you can address them and either maintain or increase your score.
Better Financial Decisions
A company for monitoring credit will show you changes to your credit score. When you are informed of your credit score, it helps you make better financial decisions. You can evaluate your performance for that month and then identify the things that need improvement or that you are doing right.
Can Help You Detect Identity Theft Early
While there isn’t a sure-fire way to protect yourself from identity theft, a good credit motoring service can help you spot the signs before things get out of hand.
Choosing a Credit Monitoring Service
When choosing a service, it helps to know some things to look for. Different services provide different selections of the features. If there is something that you are looking for in particular, it helps to take note of that and keep that information handy when comparing different plans.
How Many Credit Bureaus Are Monitored
This is a big difference in credit monitoring services. You may see just one bureau monitoring or three-bureau monitoring. There are three major credit bureaus. If you get a loan at a car dealership then the salesperson pulls the credit report using a hard inquiry to open the loan. The hard credit check and a new line of credit are reported to the bureaus.
With this example, it may only be reported to Experian. While the information eventually gets reported to all three, for the next few weeks it may only show up on Experian. If you sign up for a service that only monitors one then you aren’t alerted to the activity for a few weeks. If you signed up for a service that monitors all three then you will be alerted as soon as it’s updated. If you don’t find out about the situation for several weeks then there is plenty of time for damage to be done. While monitoring with just one bureau is usually cheaper, you are only getting partial protection.
Many services offer multiple options so it’s important to determine which features you want and make sure the service you are going with offers them. Don’t be tricked into signing up for services you don’t need. It’s a big business so there are a lot of providers out there that make their money by selling services that aren’t necessary.
Does It Deliver What’s Promised
It’s best not to go with the least expensive service, even if the offer sounds promising. You want to choose a service that is proven in what they deliver and what they promise. You are trusting your most sensitive and personal data when you are signing up for a service so you want to make sure the company you are using delivers on the service. Established names can be proven to do this.
You can also pick a company based on if they will help you after your data has been comprised. If you are paying for this then check to see if the service offers help beyond what you can get for free already. Even if the company does promise this assistance, make sure you drill down on the details.
If It Offers Insurance - That’s a Plus
Some companies will offer insurance and reimburse you for financial damages. You may not be covered for any damage that happened before you signed up and you may not get full compensation for money that was stolen from you through identity theft.
Difference between Credit Monitoring and Identify Theft Protection
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Make Smart Financial Decisions
When you are searching for credit monitoring services, you will also run into another service called identity theft protection. The features offered by these types of services go along with monitoring and one can typically form the other. Features include Social Security Number tracking, dark web scanning, and more. In order to protect identity online, there is much more monitoring that needs to take place.
Identity theft protection services are usually offered through an annual or monthly subscription and can also include credit file monitoring, as well as alerting you when personally identifiable information, like your Social Security Number, is being used in ways that may not show up on a credit report. Services may also help you fix the problem should your identity be compromised.
Services can be available through your insurance company or bank and usually come for a fee. You may also seek out an independent service. If your identity is stolen, it can take months to unravel the issues and while you can take the steps to fix it on your own, you can also rely on the service that offers help.
Whether or not you should choose to go with identity theft protection will depend on your comfort level. If a company is offering you free services, it won’t hurt to take advantage of it but know that the services won’t last forever. Everyone can be a victim of credit fraud and identity theft so it never hurts to be protected.
Fixing Credit Report Errors
If you notice errors on your report, either on your own or with the help of credit monitoring, there are steps you need to take in order to get the situation fixed as quickly as possible.
Contact the Bureau
You should contact the organization that provides the information to the bureau and the credit bureau itself. Under the Fair Credit Reporting Act, both of these companies are responsible for correcting the information. All three credit bureaus allow you to file disputes online and Experian will only accept online submissions.
Start off by telling the credit bureau the information you think is wrong. They will have to investigate the information in question within 30 days unless they consider the dispute frivolous. Include copies but not original documents that support your argument. In your communication, you also need to give your name and address.
The communication with the bureau should identify the disputed item in the report, state the facts and explain why you need to dispute that information, and then request correction or deletion. You can also include a copy of the report with the information in question circled so that it’s easy to find.
If you are mailing a letter and not putting the request online then you will want to send it via certified mail so you can make sure the credit bureau receives your information. Keep copies of any letters and enclosures.
Inform the Provider about the Dispute
After you have contacted the credit bureau, the next step is to write to the creditor or whoever provided the information and explain that you are disputing the information with the bureau. Include copies of documents. Many providers have an address for disputes. If the provider then reports the same information to the bureau again, it needs to include a notice of the dispute.
Put in a request to the provider to copy you on all correspondence to the bureau. The process can take between 30 and 90 days. In some states, you are entitled to get a free credit report from the credit bureau once the dispute is registered to verify updated information. Check to see if you get this service.
Keep in mind that credit bureau investigations may not always be resolved in your favor. If this is the case then the credit bureau can send your statement of the dispute in future reports. If you request, the credit bureau can also provide the statement to anyone who gets a copy of the report. There is a fee for this service but it may be worth the cost.
If the investigation doesn’t produce results you feel are accurate and the information on the credit report is causing you financial harm, you may need to think about hiring a lawyer as a last resort. It’s important to be vigilant when reviewing and correcting any errors that you see on your credit report.
Final Thoughts
Credit monitoring is an important service that can alert you to changes in your credit report. Credit monitoring services may also be combined with identity theft protection, depending on the right one you choose. You can do monitoring on your own, as long as you are vigilant about it and keep up with it.
If you don’t feel that you can keep up with it then a monitoring service can take that off your to-do list. There are plenty of different companies to choose from so you need to make sure you choose the one that has the features you want. Protecting your financial future is important and credit monitoring can help.