Credit Monitoring Tools: Extra Protection for Consumers

By on | General Debt & Loan Consolidation Information.

Each year, thousands of American consumers aiming to get out of debt or interested in improving their credit rating or keeping tabs on their credit report seek the financial peace of mind offered by credit monitoring services. These consumer-oriented programs, which are available through the three leading credit reporting agencies (TransUnion, Experian, and Equifax), provide subscribers with periodic reports concerning their credit file and mechanisms to track, manage, and safeguard their identity and credit information. By allowing subscribers to monitor updates on the status of their credit data, credit report monitoring obviates the need to continuously consult the latest credit reports. Consumers receive alerts about likely reporting and posting mistakes and are informed of their latest credit standing. Credit monitoring also serves as a powerful shield against fraudulent activity and identity theft. Subscribers pay a small fee-usually less than $10 per month- to obtain these credit services. When shopping for a credit monitoring program, consumers should select one that offers the most competitive price and favorable options and that best corresponds to their needs.

In addition to furnishing subscribers with credit reports from the three major CRAs, the average credit monitoring service offers numerous tools for insuring against identity theft, warning of changes in the credit report, and analyzing credit profiles. Each credit bureau must, upon the consumer’s request, furnish him or her with one free credit report per year. Typically, credit monitoring providers scrutinize and analyze essential components of their subscribers’ credit report and score on a quarterly basis and track changes in the latter from one quarter to the next. By tracking key elements of consumers’ credit such as outstanding balances or delinquent accounts, the monitoring service helps subscribers observe trends in their credit report that may be impacting their credit rating. Ongoing enrollment in a credit monitoring program is highly recommended for individuals who are victims of identity theft, particularly those whose social security numbers have been compromised. It will enable them to receive warnings of future security breaches.

Credit agencies usually offer a wide array of credit monitoring tools including the following:

1. Monitoring alerts

Subscribers to monitoring services are immediately informed – within 24 hours – of any changes to their credit file, and they can select their preferred medium of notification- wireless phone, email, or text message. Such notifications enable consumers to detect fraudulent activity quicker and consequently reduce its adverse impact on their credit. Credit monitoring services generate alerts on a weekly basis after surveying hundreds of data sources for changes relating to the following types of information:

name (new account opened in subscriber’s name) social security number phone numbers address date of birth employers accounts (new accounts; bank account openings) collection company records account balances public records (i.e. tax liens, foreclosures, bankruptcies) problem accounts credit card applications/loan applications inquiries by lenders

Credit monitoring services also provide user-friendly charts displaying changes in the 1) number of delinquent accounts, 2) number of negative items on the credit report, 3) number of recent credit applications, 4) outstanding balance on all accounts, and 5) FICO score. Subscribers are notified in real time whenever modifications have been made to their credit rating and are furnished the reason for those changes. They also receive alerts regarding changes to their credit report including late payments, new accounts, recent inquiries, as well as fraudulent activity. Such information protects consumers against those attempting to assume their identity for purposes of obtaining financing. One important benefit of subscribing to a credit monitoring service is that identity and credit fraud is uncovered instantly, instead of months after the fraudulent activity has taken place.

2. Detailed credit analyzer

Credit monitoring services also provide in-depth analyses and charts that show subscribers how to increase their credit rating and inform them of the different factors and activities that are taking a toll on their score. Credit reporting agencies also inform subscribers of the rates for which they might be eligible and offer useful tips on how to boost their credit rating. Credit analyzers show which actions increase the FICO score the most and how much time is needed to effectuate such an improvement. They also show how defaulting on one or a few payments can impact the FICO score and report. Credit analyzers are a very useful tool for consumers working diligently to boost their credit rating.

3. Online record of credit monitoring activities

Credit reporting agencies offer subscribers to their credit monitoring program the opportunity to view an online history of all reports and alerts by date.