What Is Credit Monitoring?

What credit monitoring cannot do 

Credit monitoring cannot prevent identity theft or credit fraud. That’s because credit monitoring can’t stop someone from misusing your identity once it’s been stolen. It simply notifies you of changes in your credit reports.

And while credit monitoring can help you detect signs of identity theft, it can’t help you recover your identity. It’s up to you to take action if fraud has been confirmed. For example, you could freeze your credit, call your financial institutions, and file a dispute with the appropriate credit bureaus.

Because credit monitoring focuses on your credit activities (credit cards, loans, bill payments, etc.), it may not be able to catch suspicious activities going on outside of your credit reports.

For example, basic credit monitoring services generally don’t keep tabs on what’s going on in your bank accounts—like if someone is making unauthorized withdrawals from your checking account. 

Also, they may not be able to alert you if someone is using your Social Security number to file a fraudulent return or steal your tax refund.

Is credit monitoring free?

Some banks and credit card companies offer free credit monitoring services to their customers as part of their membership benefits.

Also, if your personal information has ever been compromised in a mass data breach, sometimes you may be eligible to receive free credit monitoring from the company or organization that was impacted. 

If you’re looking for particular monitoring features, there are paid services available as well. For a monthly or annual fee, some companies can offer a suite of services on top of basic credit monitoring that may not be available from free service providers. 

For example, they may be able to run more comprehensive scans that go beyond just tracking your credit reports. Some paid services may even offer personalized recommendations, insurance coverage, or identity recovery assistance as part of their overall credit monitoring package.

Some things to consider when choosing a service provider: Whether you’re looking for free or paid credit monitoring, it’s important to understand what’s covered and not covered in the service agreement. For instance, does the credit monitoring cover all three credit bureaus or just one specific bureau? What kind of alerts will you be getting? And if you’re paying for extra features, are they worth the extra costs? 

Bottom line: Credit monitoring services—free or paid—can vary widely in terms of quality. It’s a good idea to do some comparison shopping before signing up. When looking at a specific provider, consider its business reputation, product offerings, and costs.

You can do some basic credit monitoring yourself

Whether or not you choose to sign up for credit monitoring services, there are some basics steps you could take to protect your personal information and monitor your own credit. While you may not get the benefit of receiving real-time alerts, doing some credit monitoring on your own can help you stay vigilant. 

Consider:

• Creating strong account passwords and updating them regularly. 
• Setting up banking and credit card alerts, so that you can be notified of certain activities, like transactions exceeding a certain amount, a card being declined, international purchases, address changes, etc. 
• Reviewing your bank or credit card account statements when you get them. If your credit card company provides free credit scores, keep an eye on that as well.
• Requesting and reviewing your free credit reports from the national credit bureaus (Equifax, Experian, and TransUnion). Remember, you’re entitled to a free report from each of these bureaus once every 12 months. 
• Freezing your credit, if you’re worried about identity theft, to prevent others (both lenders and thieves) from accessing your credit files without your authorization.

How to dispute credit report errors

If your credit monitor alerts you to something in your reports that you don’t recognize (whether the error is due to an honest mistake or fraud), you can contact the appropriate credit bureau to dispute it.

You may also want to contact the information provider (the company or organization that originally reported the disputed information to the credit bureaus) to let them know that you’re disputing an item in your credit report. 

You can typically file a dispute online, which alerts the credit bureau to investigate the issue. 

In addition to submitting a dispute, you may also have to provide certain documentation depending on what specific information you want corrected. For instance, if you’re disputing a credit card account opening, you may have to provide proof that it was the result of someone stealing your identity. Once the dispute investigation is completed, the credit bureau will notify you of the results. 

Visit the Federal Trade Commission website for more information on how to dispute credit report errors.