Protect your Credit Rating with Credit Monitoring

June 23, 2013

Credit monitoring is an affordable yet crucial tool if you want to save yourself from the heartache of ID theft and credit fraud. In this article, we show how credit monitoring works, as well as how to apply credit monitoring to protect your credit rating.

Identity theft is a growing problem that affects thousands of consumers every year. While there is no 100% fool-proof way to prevent credit fraud, there is one thing that will enable ID theft victims to cope with the crisis as it happens: credit monitoring to protect credit rating.

Credit monitoring to protect credit rating works as a watchdog that will alert consumers just as ID theft is being committed against them. While it will not stop the ID theft at all, the "alarm bells" that would be raised  would allow the victim to freeze his accounts and file reports immediately. There may still be considerable damage done, but at least it will be nipped in the bud.

In order to protect your credit rating, it is important to dispute credit reporting errors and even fraudulent activity as soon as they appear on your account. This way, the fraudulent entries will be deleted from your report, and your credit score may then be recovered as these entries are removed from your accounts. When you report fraud as it happens, the report will also stop the thief from making more transactions that will only harm you and your credit score.

When you monitor your credit regularly, you are ensured that your accounts are used only by you, until you will find activity of transactions that suggest otherwise. When you do, and when you take steps to dispute those transactions and correct your credit history, you may save yourself months of pain.

Here is how credit monitoring works:

According to Daily Finance:

“Credit monitoring gives you early warning that somebody may be trying to steal your identity--such as when an inquiry or a new account mysteriously appears on your credit report, or when you get a credit monitoring alert stating that your home address has been suspiciously changed. (Identity thieves often re-route mail in order to have your private information sent to them or to receive new credit cards they’ve applied for in your name.)

Thus, as an unauthorized person creates transactions with either your credit accounts or your SSN data, thanks to credit monitoring, you will be alerted of identity theft as it happens, as soon as it happens.

There are other financial and credit experts who disagree that credit monitoring is needed. They advocate vigilance with your own accounts. Regularly checking your credit accounts is the best practice. However, using a credit monitoring service would be a good fallback if you are one of the many who fail to check their accounts.

For example, when you're on vacation, you're most likely not in the business of checking your financial documents since your mind is probably on enjoying your trip rather than whether anyone is breaking into your accounts. Thus, when you have a credit monitoring service in place, as soon as anyone is committing ID theft against you, your accounts and your data, you will be alerted, even when you're off enjoying a piña colada on some tropical island.

Even though you regularly monitor your credit, a credit monitoring service will help you cope with the damages that ID theft can do, as soon as they happen. Some of the worst cases of ID theft have happened because the account owners weren't regularly checking their accounts. In fact, the ID thief was left to do more damage because the only time that victims were tipped off to such a crime happening to them was when clues of their data and accounts being used started to get through to them.

Remember that ID thieves are smart, just as they are dastardly. Some ID thieves will reroute your mail, so you may not be able to discover that you're being used, and in very devastating way, to fund their own shopping sprees. Not until a stray mail from a possibly shocking purchase happens your way. The thing is, if the thief was particularly smart, the chances of mail or contact from creditors getting through to you are probably next to nil.

What does $10 buy? A pizza?An Amazon Kindle book?A couple of paperback novels?A domain?An audio CD? Five packs of Hershey's chocolate bars? By contrast, how much does it cost to repair credit damaged by ID theft? Thousands of dollars?

Thus, if you're a busy person and you have virtually no time to monitor your credit, $10 to $15 a month spent on a credit monitoring service may prove to be a good investment for you.

In the quest to prevent credit fraud, before you ever decide on a credit monitoring service to use, do your research and do it thoroughly so that you will be armed with knowledge to make the right decision. Remember, as Francis Bacon once said, "Knowledge is power."

Amy Johnson is an active blogger who is fond of sharing interesting finance related articles to encourage people to manage and protect their finances.

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