What Credit Monitoring Can (and Can’t) Do for You

JUN 10, 2011

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What’s all this talk about credit monitoring? Just what is it, really? And is it as good as it sounds? Is it really a bulletproof vest against identity theft?

There is a variation in the scope of credit monitoring products. Some are online systems that perform the labor-intensive aspects of watching your credit – like scanning the Internet for unauthorized use of your personal information – for you. Others strictly monitor your credit report at the credit bureaus and alert you to any changes. Either way, the monitoring takes place around the clock, every day; it would be difficult to maintain that level of scrutiny on your own.

While keeping an eye on your ever-changing credit report is essential to preserving your good credit history, no one has yet found a completely fail-safe way to prevent identity theft. Still, it’s worth it to understand just what monitoring your credit can and can’t do for you.

Overall online credit monitoring products:

Can alert you to changes in your credit report and score.

Can’t prevent you from being targeted by identity thieves.

Can help you keep track of your information and where it appears online.

Can’t prevent you from encountering phishing e-mails and other online scams.

Can alert you to indications of fraud.

Can’t help you take the most important steps to prevent fraud, such as protecting your Social Security number and minimizing the number of credit cards and identifying information you carry in your wallet.

The benefits of monitoring credit actually go far beyond catching identity theft as soon as it occurs. Keeping track of your credit history can help you better manage your overall financial health.

For example, some credit monitoring products will send you an e-mail alert whenever a new credit application is made in your name. If you haven’t made that application, the alert could help you uncover an instance of fraud. However, if you have made that application, the alert could inspire you to review your credit to see just how many new applications you’ve made recently. Too many new accounts and applications in a short time frame can adversely impact your credit history.

Credit monitoring tools should never be used as a substitute for taking sensible, necessary precautions like protecting your PINs and changing account passwords regularly. But online monitoring tools can be an effective, helpful enhancement to your overall efforts to take care of your credit health.