Beyond The Annual Credit Report: Should You Monitor Your Credit?

Some time ago, I pulled my credit reports and checked them for errors. Everything looked fine then, but instead of waiting until next year to get free credit reports (via AnnualCreditReport.com), I decided to check into credit monitoring, which allows me to review my credit reports on a regular basis (and not just once a year). So what can I expect from credit monitoring?

Beyond The Annual Credit Report

The three credit bureaus — Equifax, Experian, and TransUnion — keep track of our credit information. They maintain our credit reports, which contain details such as our addresses and employers, as well as the loans we’ve taken out — from our mortgage to our credit cards and beyond. Our credit reports also show how we’ve paid our bills, or even if we’ve filed for bankruptcy, according to the FTC.

Creditors, employers, potential landlords, and even insurers look at our credit reports before deciding to work with us. If your report is error-ridden or if someone’s stolen your identity, you might be offered a credit card with a higher interest rate or you might be turned down for a job. So it’s in your best interest to make sure that your credit reports look acceptable.

By signing up for a credit monitoring service like Equifax Credit Watch Gold with 3-in-1 Monitoring and Score Power, you can access your credit report, be notified of key changes (like a different address or new credit lines) via email, and be warned if any signs of identity theft are found. Although you’re only allowed receipt of one 3-in-1 report per year, you can access your Equifax credit report an unlimited number of times. In addition, you can look at your Equifax FICO score, which can help you determine if the time is right to apply for a new loan or credit card. This service costs $14.95 a month.

Why Monitor Your Credit? The Pros

Besides Equifax, other credit bureaus also offer credit monitoring services. For instance, looking over TransUnion’s credit monitoring offer called TrueCredit, I see that:

• It’s an automated way to stay apprised of my credit activity.
• I’ll be emailed within 24 hours of key changes to my report.
• I might be eligible for up to $25,000 in ID theft insurance.
• I’ll have access to specialists who might be able to walk me through any questions I have.

The TransUnion TrueCredit monitoring service is $11.95 a month after a 30-day free trial.

There are also other services that are often presented with free trial offers. Here are a few examples of such services:

What To Buy Where To Buy Length of Trial Period Regular Cost Equifax FICO Score and Report FICO Score Watch 30 Days $9.95 a month Identity Lookout Identity Lookout 30 Days $9.95 a month Proprietary SMART Scores and Report Smart Credit 5 Days $29.95 a month Credit Reports and Scores FreeCreditReports360.com 7 Days $29.95 a month Credit Reports and Scores FreeCreditReport.com 7 Days $14.95 a month Credit Reports and Scores CreditReport.com 7 Days $14.95 a month

An example from this list is the FreeCreditReport.com’s Triple Advantage credit monitoring service. With Triple Advantage, I’ll be notified of key changes to all three credit reports, have access to Experian’s proprietary credit score (called the Plus Score) and receive unlimited access to my Experian report, etc. — all for $14.95 a month. And if I find any problems, I’ll have access to the dispute process maintained by each credit bureau.

The Cons of Credit Report Monitoring

Attractive as it sounds, a credit monitoring service has a few disadvantages that you may want to sort through before you sign up.

• You’ll need to pay for it: Even if you’re only paying $14.95 a month, that adds up to almost $200 annually that you could be applying to your online savings account, auto insurance premium or your delightful PlayStation 3!
• It may not be that much hassle to do yourself: You can save money by monitoring your own credit. Like I did recently, you can go to AnnualCreditReport.com once a year; and if you need more reports, then you can sign up for them via the credit bureaus.
• You need to monitor all three credit reports for the best coverage: If you only have your Experian credit report monitored, you may not be aware of what goes wrong with your TransUnion report. Having just one report won’t cut it.
• Alerts on your reports won’t automatically fix any problems found: Even if a monitoring service finds errors or irregularities on your report, you’ll still need to call your creditors yourself and resolve these issues. Credit monitoring companies won’t fix the mistakes for you.
• Freezing your report helps: A security freeze on your report will stop any new fraudulent accounts from being opened in your name. This is one strategy that will allow you to spend less time scouring your reports. This will limit the amount of time you’ll need to spend reviewing your reports in the future.

Ultimately, it may be worthwhile to take your free credit reports from AnnualCreditReport.com, then supplement a few months later with a free trial from one of the credit monitoring services. That way, you could compare your reports to see if any changes have been made in them, and take action to fix them if necessary.