What Is Credit Monitoring And How You Can Benefit from It?

Hackers and fraudsters aim to gain access to your credit card by exploiting your personal information. They target crucial information such as your name, PAN card details, and bank account number to conduct unauthorised transactions under your name. While it's impossible to completely prevent data breaches, there are steps you can take to protect yourself from their negative impacts. It's crucial to stay informed, especially when it comes to financial matters. Reviewing your credit report for any discrepancies is not only important but also necessary. By periodic credit monitoring, you can keep track of your credit history and protect your sensitive information from fraudsters. This article explains the significance and benefits of credit monitoring to help you take advantage of this feature and secure your finances.

What is Credit Monitoring?

Credit monitoring or credit report monitoring is a service that oversees your credit activity. It keeps an eye on your credit history for any modifications or dubious behaviour. With credit monitoring, you receive alerts about any modifications made to your credit reports. This helps you stay informed and take necessary action in case there is a possibility of unauthorised use of your personal data.

How does Credit Monitoring work?

By subscribing to a credit monitoring service, you receive instant alerts on all your credit-related activities. These activities may include opening new loan accounts, availing new credit cards, or any hard inquiries made by lenders while reviewing your loan/credit card application. This allows you to detect any fraudulent activity involving your personal information. If you notice any discrepancies, it could be either a data entry error or a sign of suspicious activity. In such cases, you should report the issue promptly to prevent a fraudster from making a large purchase using your credit card or taking out a loan in your name. Failing to notify the credit bureaus of these anomalies may harm your credit score, which can affect your ability to get a loan or credit card in the future.

What are the benefits of Credit Monitoring?

Credit report monitoring reports can differ from company to company. It enables individuals to detect any fraudulent activities on their accounts and take precautionary measures in advance. Here are some advantages of credit monitoring:

1. You can plan your finances better:

Planning their finances in advance to ensure a secure future is important for everyone. Poor financial management can result in a low credit score, making it challenging to obtain loans. Credit monitoring provides notifications on changes to your credit score. This enables you to understand how your financial transactions impact your credit score, assisting you in making better financial decisions in the future. Moreover, you can assess your credit health and determine areas that require monitoring, helping you to implement corrective measures.

2. Helps prevent identity theft:

Preventing credit card fraud is crucial as identity theft is a prevalent issue. There has been a significant increase in credit card and UPI fraud in the country after the Covid-19 pandemic. Such credit card fraud can harm your credit score and credit report. This is where credit monitoring can be helpful. These services can aid in repairing your credit score by working with credit reporting agencies promptly. Some monitoring companies may charge an additional fee to provide specific information on this matter. Additionally, these services notify you of any suspicious activity that may lead to credit card fraud.

3. Provides personalised alerts:

If you have been a victim of credit card fraud previously, you can request that your credit card company send you notifications if they detect any suspicious activity. Certain financial institutions and credit card companies offer extensive services, allowing you to customise the alerts, notifications, and reports you to receive from them. Moreover, for loans, they may assist you in providing information on the best rates based on your financial situation.

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What activities are covered under Credit Monitoring?

Credit report monitoring services may provide reports on various credit-related activities; however, the specific information reported can differ among different providers. These activities may include:

• Hard inquiries made on your credit report

• Payment history and balances on your credit cards and/or loans

• Any new loan/credit card accounts opened in your name

• Changes to your name or address on your credit file

• Personal information on the dark web (such as your email address and passwords)

• Public records associated with your credit, like bankruptcies

What are the limitations of Credit Monitoring?

• It might not be possible for most services to prevent hackers completely from accessing your data

• Credit monitoring services can only notify you about any inquiries made, but they cannot prevent others from using your identity to apply for credit cards and/or loans

• It cannot correct errors in your credit report, so you are required to review your credit report on a regular basis to identify any inaccuracies and take action

• Credit monitoring service cannot file a report on your behalf in case of any suspicious activity

• It is unable to prevent your personal information from being compromised in a data breach

• It cannot stop someone from using a skimming device to steal information from your credit card

• Freezing your credit and correcting errors in your credit report cannot be done through this tool

Do Credit Monitoring services harm your credit score?

Using credit monitoring services does not harm your credit score. In fact, it enables you to recognise any discrepancies, fraud, and inconsistencies in your report and take corrective measures before it becomes problematic. The credit score check involved in monitoring is a soft inquiry that does not affect your credit results. However, if you apply for credit, such as instant personal loans, the lender will conduct a credit score check to ascertain your eligibility, which could harm your credit score.

Who should opt for Credit Monitoring services?

Credit monitoring is necessary for everyone, but certain groups of people are more vulnerable to credit card fraud. These include the elderly, who are often targeted due to their lack of familiarity with modern technology, and young adults between the ages of 30-39, who are more active on social media and other apps and are more likely to fall victim to scams. Anyone whose personal data has been compromised in a data breach is also at risk of credit card fraud.

Final words:

Credit Monitoring is an essential tool that helps you stay informed about your financial standing. It provides a safeguard against the ever-present threat of credit card fraud and identity theft, both of which can have devastating effects on your credit score and financial wellbeing. By utilising a credit monitoring service, you can proactively monitor any changes to your credit report or score and take swift corrective action if necessary. The convenience of credit monitoring is undeniable, as it allows you to keep tabs on your financial health from the comfort of your home.

KETKI JADHAV is a Content Writer at PersonalFN since August 2021. She is an MBA (Finance) and has over seven years of experience in Retail Banking. Ketki specialises in covering articles around banking, insurance, personal finance, and mutual funds and has been doing it for over three years now.