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Credit monitoring is a service that tracks any changes made to your credit reports that could be signs of fraud or identity theft. It is helpful to be alerted in real time to any new accounts being opened in your name, changes to your credit or missed payments.
Continue reading to learn what credit monitoring does, if it’s worth it and how to protect yourself from becoming a victim of fraud and identity theft.
What does credit monitoring do?
The main purpose of credit monitoring is to notify you of any changes to your credit report and credit score. By being aware of every update made to your credit report, you can immediately know when something is suspicious or unfamiliar and take action. Credit monitoring can also notify you if any changes are made to your personal information, such as the name or address affiliated with your credit report. This way, if someone steals your Social Security number (SSN) and assumes your identity, you will know that these changes are unauthorized.
What credit monitoring does not do
Although credit monitoring is convenient for alerting you to any changes made to your credit report, it does not do a handful of things, including preventing cybercriminals from committing identity theft, reporting fraudulent activity to credit bureaus or recovering your stolen identity.
Stop cybercriminals from stealing your identity
Credit monitoring cannot discourage or prevent cybercriminals from stealing your identity. It will only send you alerts about changes made to your credit report and credit score. Investing in a credit monitoring service will not stop cybercriminals from stealing any of your Personally Identifiable Information (PII) or publishing it on the dark web.
Report fraudulent activity to credit card companies and bureaus
If you become a victim of fraud or identity theft, a credit monitoring service does not automatically report fraudulent activity to your credit card companies or credit bureaus. You are responsible for notifying your credit card issuer and the three major credit bureaus – Experian, TransUnion and Equifax – about the fraudulent activity.
Recover your identity if it’s been stolen
After you learn your identity has been stolen, a credit monitoring service cannot recover your identity for you. It is your responsibility to take the necessary steps to freeze your credit if you become a victim of identity theft.
Is credit monitoring worth it?
Credit monitoring is a valuable way to protect yourself if you ever become a victim of identity theft, which is becoming more common with the increase in data breaches and compromised PII. In just the first half of 2024, 552,000 cases of identity theft were reported to the Federal Trade Commission (FTC). With credit monitoring, you can quickly take action against any suspicious signs of fraud or identity theft by being notified immediately when unfamiliar activity occurs on your credit report. All three major credit bureaus offer free credit monitoring, so there is no need for you to pay any additional fees to enroll in a credit monitoring service.
How to protect your credit against fraud and identity theft
There are several ways you can protect your credit against fraud and identity theft, including using strong passwords on your bank accounts, reviewing your bank statements regularly and enabling notifications for your credit card accounts.
Secure your bank accounts with strong passwords and MFA
You should protect your bank accounts with strong, unique passwords to prevent someone from gaining unauthorized access to your financial information. A strong password consists of at least 16 characters, including a combination of uppercase and lowercase letters, numbers and symbols. Make sure not to use any personal information in your passwords, such as your birthdate or pet’s name, because a cybercriminal could more easily crack a password with information they can research about you.
In addition to using a strong password for your bank account, you should also secure it by enabling Multi-Factor Authentication (MFA), which provides your account with an extra layer of security by requiring another way to verify your identity. When you enable MFA, even if a cybercriminal knows your username and password, they will be unable to access your bank account because they will need another way to authenticate your identity. Some examples of MFA include a code from an authenticator app, a PIN, an answer to a security question or biometric information. With strong passwords and MFA, your bank accounts will be much more challenging for a cybercriminal to access, further securing your credit against identity theft.
Regularly review your bank statements and activity
It’s important to review your bank statements and accounts regularly to check for any signs of unusual or fraudulent activity. For example, if you check your bank statements once a year, you may not notice a large withdrawal or unusual charges being made until it’s too late to report them as fraud. However, by frequently checking your bank accounts for suspicious activity, you can take immediate action to stop cybercriminals from destroying your credit and stealing your money.
Enable notifications for transactions and changes made to your credit card accounts
Make sure to enable notifications for any transactions or new charges on your credit card accounts so you can identify any unauthorized activity right away. If you don’t have notifications enabled and a cybercriminal begins to use your credit card on multiple occasions in a short span of time, you may not recognize the fraudulent activity until it’s too late. Notifications allow you to know when fraudulent activity has occurred in real time so you can report suspicious activity and unauthorized transactions to your credit card issuer.
Consider placing a freeze on your credit
A credit freeze stops creditors from accessing your credit report, which also prevents them from approving any new loans or lines of credit in your name. If you know your identity has been stolen or you have become a victim of fraud, you should place a freeze on your credit to stop anyone from impersonating you to take out a loan or credit line. Even if you aren’t a victim of fraud or identity theft, it is a good practice to place a freeze on your credit as a precautionary measure until you need to take out a loan or open a line of credit. To place a freeze on your credit, you will need to contact each of the three major credit bureaus: Experian, TransUnion and Equifax.
Request free annual credit reports from the credit bureaus
You should request free credit reports from each of the three major credit bureaus every year to monitor your credit and protect your identity. By reviewing your credit reports early, you can spot signs that your identity may have been stolen and report fraud accordingly. Since your credit reports can impact mortgage rates, loan approval and more, it’s important to request them annually to ensure your information is accurate and to protect your credit.
Monitor your credit to prevent fraud
Even though credit monitoring can’t stop your identity from being stolen, it can significantly reduce the negative impacts of fraud and identity theft. Using a credit monitoring service allows you to receive real-time notifications about your credit reports and credit score, so you will know when any unusual activity occurs. Protect your credit by using strong passwords on your bank accounts, checking your bank statements regularly and placing a freeze on your credit as a precaution.