Staying informed especially when it comes to finances is staying empowered, and truly so. Monitoring your credit record for discrepancies is not just important, it is necessary. Credit monitoring might be your solution to staying on top of your credit history. 

Let us understand what this term implies: 

What is the Meaning of Credit Monitoring? 

Credit monitoring refers to staying on top of your credit history by getting notified about any unusual changes as well as any unusual transactions that may have happened through any of your accounts. This helps in reducing the chances of fraud and misuse of confidential information by unscrupulous elements or credit card theft. If you have been a victim of cheating in the past, opting for these services is a prudent decision. It is also a handy tool to monitor your credit score if you are planning to apply for a Personal Loan in the future.

What are Credit Monitoring Services Offered? 

The reports received vary from company to company and what you decide to opt for. However, parameters like new accounts opened in your name, new accounts opened hard inquiries for a loan or other credit products on your report, name and other changes to your report, etc. are the various details that you can receive from your credit monitoring service. 

However, credit monitoring might not be the right option for everybody. Is it the right product for your requirements? Let us understand the scope of its offerings which will help you evaluate whether it is the right product for your requirements:

  • Help understand Identity Theft: Identity theft is a serious problem and is one of the main factors impacting a person’s credit score. This is where credit monitoring steps in and notifies you of any suspicious activity that is indicative of possible fraud. This, in turn, enables you to take the appropriate action by notifying the relevant authorities thereby preventing damages as well as keeping your credit score healthy.
  • Helps in Controlling your Finances: Even a couple of points of change in your credit score can affect your eligibility for your loan, the interest rates that you can avail of, etc. Credit monitoring will notify you about changes in your credit score. Being alert in time enables you to re-think and rectify your spending habits.
  • Monitor Credit Inquiries made on your Behalf: Credit monitoring companies allow you to customize updates and receive information that is the most relevant to you. For instance, you have been a victim of theft in the past; you can opt to receive notifications whenever there is a suspicious transaction on your credit card.
  • Helps in Identifying Fraudulent Transactions: If a credit card has been stolen or hacked, details of any suspicious transactions made through it are also monitored through these agencies, who then alert the cardholder. 

What are The Limitations of Credit Monitoring? 

Although credit monitoring can help in identifying signs of potential fraud, monitoring, by itself, cannot help in preventing fraud. Monitoring by itself cannot prevent your data from being breached, prevent someone from opening fake accounts, applying for credit on your name and much more. To be on the safer side, apart from credit monitoring services, one should be extremely careful about sensitive information such as card numbers, bank account numbers, passwords, mobile numbers, OTPs, etc. Never leave your passwords lying around for people to discover, always employ a safe two-factor authentication to carry out transactions, and be careful about your cards. In case of loss, contact your bank immediately to hotlist the card.

Does Credit Monitoring Adversely Impact My Credit Score?

No, it does not. On the contrary, it helps in identifying errors, frauds and inconsistencies in the report allowing you the opportunity of rectifying errors before it is too late. Check your credit score counts as a soft credit inquiry and does not impact your credit score. However, applying for any form of credit like instant personal loans will result in hard inquiries i.e. (the lender checking your credit score to evaluate your eligibility for the loan) and will impact your credit score adversely.

Credit monitoring, if used correctly can help in planning your finances better and infusing financial discipline in your life. If you do decide to opt for credit monitoring, use the results to help plan your life better and elevate your standard of living!

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