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A Guide to Credit Monitoring

Credit scores are made up of an extremely large data pool that takes into all kinds of everyday purchasing habits.  They change fluidly, moment to moment, for all kinds of reasons – occasionally due to unforeseen elements like fraud or human error.  Monitoring your credit score is a good way of knowing when and how it’s changing, so you can know what to do about it.  Let’s consider the ramifications of the service, what kind of products are available to you to perform the task, and how to make the most effective use of it.

Why It Matters

Your credit rating is an essential aspect of your financial life.  All major institutions that can help you get a car, get a house, or procure any kind of important service – like a loan put towards a business investment – will use the information stored by credit bureaus to determine whether or not to approve you, and what interest rates to set on the loans you acquire.  This can mean the difference between sinking or swimming in your financial life, and its importance really can’t be overestimated.

If you’re not monitoring your credit carefully, you can find that a mistake or instance of identity theft has reduced your credit dramatically while you weren’t looking.  It’s much better to correct these things as soon as they come up, thus avoiding the worst consequences of unexpected and unwelcome information in your credit rating pool.

What’s Available

The federal government provides a free credit report at Annualcreditreport.com, and it’s a good starting point, but it doesn’t provide the kind of detailed monitoring support of other tools like Experian’s credit monitoring software, TransUnion’s daily update package, or Citi’s IdentityMonitor program.  After a free or low-cost trial, these more robust programs tend to run at around $15 a month.

How to Use It

The monitoring programs show you the daily up and downs of your credit score, but more importantly, they give you a full report on the data underlining those numbers.  You get to see what’s affecting your rating line by line, so you can identify any errors as soon as they happen.  The more robust of these programs can even update you automatically by synching up with your computer or email account and sending you all the relevant updates.  You can set alarms for any unexpected spikes or declines, and they’ll advise you on what steps to take to avoid any unearned deprecation.

Some, like Experian’s package, also provide up to $50,000 in insurance and access to a fraud resolution specialist in the event of identity theft.  It’s the kind of situation that’s best to be prepared for, because con artists generally operate on a grab-and-go strategy, and being ready for them puts you in a position to come out on top.

Conclusion

Credit monitoring can be vitally important to a safe and secure financial life, not to mention a good planning tool for building your score.  You can know exactly how you’re being classified, and why – and that puts you in the driver’s seat.