September 8, 2024

What is Credit Monitoring and Is It Worth It?

In today's digital world, where our financial lives intertwine with various online transactions and digital footprints, it has become more important to stay vigilant about our credit health.

With the constant flow of information and the ever-present risk of identity theft and fraud, credit monitoring has emerged as a powerful tool to help individuals protect themselves against financial setbacks.

But what is credit monitoring? In this article, we'll explore the ins and outs of credit monitoring, and shed light on its significance to your financial goals.

What Is Credit Monitoring?

Credit monitoring is one of those phrases that often gets thrown around in financial conversations, leaving many of us wondering, "Do I need credit monitoring?" Well, you're about to find out.

Let's first talk about your credit score. A good credit score opens doors to favorable interest rates, higher credit limits, and better loan terms. It is a key factor that lenders, landlords, and even utility companies consider when making decisions.

Therefore, for your credit score to remain in good standing, you should ensure your credit information is accurate and up-to-date. However, it can be challenging to manually keep track of everything happening in your credit profile. This is where credit monitoring comes into play.

So what does credit monitoring do?

Credit monitoring is a service that helps you track your credit activity to keep you informed about changes and potential risks that may affect your finances.

These services monitor your credit reports from major credit bureaus—Equifax,
Experian, and TransUnion—and notify you of any significant changes, such as new accounts, inquiries, or delinquencies. It can also alert you when there is a change in your score so you can tackle any issues right away.

Understanding the Benefits of Credit Monitoring

By providing real-time insights into your credit health, credit monitoring offers significant benefits that can enhance your financial well-being.

Here are four main advantages to opting into a credit monitoring service.

1. Early Detection of Unauthorized Activities

One of the primary advantages of credit monitoring is its ability to detect and alert you about any strange activities or inaccuracies in your credit reports promptly.

By regularly monitoring your credit activity, you can quickly identify suspicious transactions, unauthorized account openings, or other signs of potential identity theft or fraudulent activity. This early detection allows you to take immediate action, minimizing the potential damage to your credit score.

2. Improving Creditworthiness and Making Informed Decisions

Credit monitoring services give you access to your credit scores and reports, allowing you to track your creditworthiness over time. This can help you assess the impact of your financial decisions and take steps to improve your credit standing.

Whether you're working towards securing a mortgage, applying for a loan, or simply aiming for better financial health, credit monitoring empowers you to make more informed decisions.

3. Peace of Mind

Knowing you have a watchful eye on your credit health can provide peace of mind. Credit monitoring gives you the confidence that any changes or potential risks to your credit profile will be brought to your attention.

What You Need To Know About Credit Monitoring Services

Now that you have the answer to the common question ‘What is credit monitoring?’ you need to understand how these services work and what they can and cannot do.

Some important points to consider when evaluating whether credit monitoring services are right for you include the following:

1. Credit Monitoring Is Reactive, Not Proactive

Credit monitoring services can help you catch potential fraud or identity theft early, but they cannot prevent it from happening.

By alerting you to changes in your credit reports, these services enable you to take action and minimize the damage caused by fraudulent activity.

To proactively prevent fraud and protect your credit, you should adopt additional measures such as practicing safe online behavior, using strong and unique passwords, being cautious with sharing personal information, and regularly reviewing your credit reports for accuracy.

2. Not All Credit Monitoring Services Are Created Equal

There are numerous credit monitoring services, each offering different features and levels of protection. Some services only monitor one credit bureau, while others monitor all three (Equifax, Experian, and TransUnion).

Some provide additional features, such as identity theft insurance, dark web surveillance, and restoration assistance. You need to research and compare different services to find the one that suits your needs and budget.

3. Consider the Cost and Value of Credit Monitoring Services

Credit monitoring services can range in price from free to several hundred dollars per year (typically $8.99 to $29.99 monthly). When evaluating the cost of a service, consider the features and level of protection it offers.

While free services may provide basic monitoring, they may not offer the same level of support and protection as paid services. Determine what features and level of protection you need and choose a service that offers the best value for your needs.

4. Credit Monitoring Is Not a Substitute for Good Credit Habits

While credit monitoring can help you detect fraud and identity theft, it's essential to maintain good credit habits to protect your financial health.

This includes regularly reviewing your credit reports, disputing any errors, ensuring timely payments, and checking your spending. You should also practice safe online behavior to help reduce the risk of unauthorized access to your credit accounts.

Credit monitoring should be seen as a complementary tool, working in tandem with responsible financial practices.

Credit Monitoring vs Identity Theft Protection

While credit monitoring and identity theft protection may seem similar, they serve distinct purposes.

Credit monitoring primarily focuses on the monitoring of credit reports and scores, keeping you informed about changes and potential risks.

On the other hand, identity theft protection encompasses a broader range of services. Apart from credit monitoring, it also includes monitoring other sources of personal data, such as public records, social media, and the dark web, for signs of unauthorized use of your personal information.
Other services also include identity restoration assistance, and insurance coverage for expenses related to recovering your identity, such as legal fees, application fees, or lost wages.

While both services are valuable tools in your financial utility belt, the option you settle on will depend on your needs and risk tolerance. However, if you decide on the more comprehensive option—identity theft protection services—ensure it has credit monitoring. It will serve as an essential warning system, giving you the first line of defense against credit mishaps.

Stay One Financial Step Ahead With EarnIn’s Free Credit Monitoring

Having a clear understanding of your credit health is crucial for achieving your financial goals.

With EarnIn, you not only gain early access to your hard-earned wages but also unlock the power of free credit monitoring—provided by Experian—right within the EarnIn app.

Be in the driver's seat of your credit health with real-time alerts whenever changes occur in your credit report—and stay ahead of suspicious activity, taking swift action to protect your credit score.

You can also gain a deeper understanding of your credit usage, inquiries, and payment history, and take steps to improve your overall credit health.

Plus, when you need cash to cover unexpected expenses or bills that have come due, our Earned Wage Access tool can help with that, too. It lets you transfer up to $100 of your earnings per day, and up to $750 per pay period with no hidden fees or interest.

Download the EarnIn app today and unlock the doors to a brighter and more empowered financial tomorrow.