5 Reasons To Monitor Your Credit Reports

It’s no secret that one of the best ways to maintain your credit status and avoid potential problems with your credit is to continually check for inaccuracies and irregularities that may exist in your credit reports. Routine checks of your credit reports and your monthly credit card statements can go a long way to help prevent any errors or unusual activity from affecting your credit score

Let’s face the facts-- with the complexities of today’s financial networks; we’re all at risk of various types of fraud which could result in adverse effects on our credit scores. We do our best to keep close possession of credit cards and IDs with the notion that “as long as no other person has my cards or information, I’m safe”. Unfortunately, this can give us a false sense of security since a great deal of personal information gathering and financial theft now occurs through electronic means. 

Invalid reporting is another issue that can hurt your credit. This particular problem occurs more frequently than was once thought. Errors can remain on a credit report for years, as many people don’t think to review their credit information until they’re ready to commit to a large purchase like buying a house or car. It’s at this critical time that they may discover a wrong address or an old collection notice and then face the daunting task of scrambling to repair the damage before it has an effect on their long term plans.

One of the keys to protecting your credit is the ability to identify errors or fraudulent activity before they translate into credit problems; or perhaps worse, a case of identity theft. By keeping a close eye on all 3 credit reports (Equifax, Experian and Transunion), you can detect these and other issues early and take the necessary steps to resolve them before they become major problems. The use of an effective credit monitoring service can make checking and monitoring your credit easy and effective, since activity is reported almost immediately.

Why you should continually monitor your credit report and credit score:

1. Early detection of identity theft and credit fraud. While checking your monthly statements for unauthorized charges is good basic practice, it is not sufficient to counter all of the new tactics that are being used by identity thieves. By monitoring your credit report on a constant basis, you can identify any new accounts that may have been opened, see any new addresses that may have been set up or view any accounts that may have collections against them without your knowledge. These issues alone are reason enough for you to begin monitoring your credit reports. 

2. Inaccuracies on your credit report. Genuine mistakes can be listed on credit reports. Credit records are accessed, reviewed, updated and reported every day. This sheer volume of activity lends itself to reporting errors resulting from computer software issues, keypunch errors or simple mix ups of files between persons with similar names or addresses. Unfortunately, some of these errors can be significant and may lead to denial of credit or higher risk assessment and therefore higher interest rates on various types of loans.

3. Monitor fluctuations in your credit score. Credit scores normally fluctuate in small increments over the course of weeks or months. However, if you see your credit score move dramatically in a short period of time and you haven’t had any noteworthy activity that would warrant such a change, it could be due to an attempt or incidence of identity theft.

4. Protection of your financial future. Knowledge is power. Try to have a thorough understanding of your credit situation and activity at all times. The ability to recognize an issue and take immediate action can mean the difference between stopping a problem before it ever starts or the need to deal with a major problem several months down the road after your credit has been affected. Don’t let small problems progress to a critical stage.

5. Monitoring your credit doesn't hurt you. Checking your own credit reports or monitoring your own credit score is important. These types of “inquiries” (soft inquiries) don’t necessarily directly affect your credit history or credit. 

For all of these reasons and others, consider having a plan for monitoring your credit regularly. Active credit monitoring is a helpful way to keep track of your credit profile. Making use of a credit monitoring service can help protect your credit status and give you some peace of mind.