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How to Use Credit Monitoring the Right Way

  January 18

This post may contain affiliate links.

never had a credit cardYou hear all the time that you should monitor your credit and sign up for an expensive service. However, you can actively monitor your credit yourself and catch any suspicious activities before it affects your life. Here are a few ways to monitor your credit the right way.

Don’t Wait for an Attack

First off, don’t wait for an attack to happen before you take action and monitor your credit. Some of the major retailers such as Home Depot, Target, and Neiman Marcus have all had data breaches, and it may take months for you to know you were on that list.

Sign Up for Monitoring Yourself

If you have been victimized by a data breach, the retailer or lender may have reached out to you and offered a free credit monitoring service. However, be aware, many times there are strings attached. For instance, you may waive your right to sue them in case of any incident that may have occurred from this breach.

So instead of signing up for their service, contact your bank, credit union, or credit card company and ask if they offer the credit monitoring service. For the most part, it’s either free or discounted to sign up. As a bonus you can read Lindgren Financial’s article that discusses if credit monitoring is right for you.

Watch Your Credit Score

To start, you should check out your credit score from all three major credit bureaus: Experian, Equifax, and Transunion. Monitoring your credit report can be easily done on a daily basis just by reviewing your scores. Write them down on a whiteboard, keep a note in your phone’s calendar, or keep tabs on a spreadsheet. Each day as you go in to check your score, you know to dig deeper into your credit report if your score has dropped.

You see, hard credit check inquiries have a negative effect on your score. As it may not drop it 10 points, it will drop one or two points with too many inquiries. A hard inquiry is performed for an employer, lender, or landlord. So, you should contact the person or company listed to see what has happened if it were not you.

Track Your Daily Spending and Other Financial Habits

Have you ever received a new credit card and just put it away for hard times? Then when hard times hit months later you use it at the gas station, department store, and grocery store. What happens next? Your credit card company calls you up a week or two later to verify charges on your account. How are you to remember each purchase and dollar amount?

A simple way to monitor your credit is to track your spending and other financial habits. Normally, you would just log into each online account and verify what was going on. However, a quick and easy fix is to sign up for an online personal finance tool such as Mint or You Need a Budget (YNAB). These services allow you to track all your bank accounts and other financial accounts online at one time.

Place a Fraud Alert on Your Account Yourself

Again, it’s not necessary to take action once something bad has happened. Instead of waiting for a fraudulent transaction, place a fraud alert on your credit file. It’s easy to do and reverse. Simply contact one of the credit bureaus, and they will alert the other two.

Many consumers are unaware that they can set this up on their account. A self-directed fraud alert expires every 90 days. After you’ve set it up, any potential creditor must contact you and get your direct permission before opening a new line of credit. If you have been victimized or there is that potential, you can apply for a 7-year fraud alert to be set up in your profile. However, you’ll need to provide documentation such as a police report to show just cause.

You hear all the time that you should monitor your credit and sign up for an expensive service. However, you can actively monitor your credit yourself and catch any suspicious activities before it affects your life. Here are a few ways to monitor your credit the right way.

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4 responses to “How to Use Credit Monitoring the Right Way

  1. If you’re using an expensive credit monitoring service, you’re definitely doing it wrong….most credit monitoring services that the credit companies offer aren’t egregious. That said, I love these tips. Stay on top of it!

  2. When I did customer service back in college, we had one person call in complaining about over $15,000 in charges to his card over the previous five years. Apparently someone stole his card information and was ordering our products. But because he never looked at his statement, he never noticed it!

  3. I only need to file a fraud alert with one of the credit bureaus like Equifax, Experian or Trans Union. I renew my Fraud alerts as often I like. And Fraud alerts last 90 days. I use a recurring calendar entry that can help with this task.

  4. I’ve had credit monitoring for the last few months for free through a blogging opportunity. I’ve found it very interesting – the things that cause your score to to up and down – but I likely won’t spend the money to keep it when my trial is over. But then again, it’s likely one of those things you don’t think you need to pay for, until you need it. 🙂

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