You know that you need credit monitoring, but how much do you need? There are different levels of monitoring, and are you better off with an independent monitoring service or should you go through one of the credit bureaus? If so, which one?
Important Update: Bureaus Offer Free Weekly Reports Through April 2021
In light of the unprecedented financial crisis caused by the COVID-19 pandemic, the credit bureaus have expanded free credit report access. You can now download your credit report from each bureau once per week through annualcreditreport.com.
We recommend taking advantage of these free weekly reports to check your credit often during this crisis, so you can avoid mistakes.
In truth, the credit and lending industries don’t favor one credit bureau over another. When a creditor or lender runs your credit, they actually pull a tri-merge credit profile, which means that they’re looking at your credit reports and credit scores from all three bureaus.
So if your lenders are looking at all three, why would you settle for looking at just one? It just leaves too much open to chance.
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You need the biggest credit picture possible
If you’re trying to maximize your credit score to get a loan, apply for a new credit card or even to negotiate with an existing creditor, you use credit monitoring to help you get where you need to be. The last thing you want when you do any of those things is to be surprised by finding your credit rating isn’t nearly as good as you thought.
Unfortunately, this is what can happen if you’re only watching your credit profile through one bureau. As a result, it’s a much better option to go through an independent third party that can offer all three credit reports and all three credit scores. It leaves no room for surprises.
How to get your three-bureau credit report
You are entitled to one free credit report from each credit bureau every year. Usually, it’s best to space them out so you get a good idea of your credit throughout the year. But this isn’t always enough. Especially if you’re concerned about identity theft, you can benefit from getting your credit reports more often. But how?
The premium version of SmartCredit (which you can get for $19.99 per month) includes a monthly 3-bureau credit report. This helps you keep track of how your score improves and keep an eye out for unauthorized activity. Knowing when suspicious activity happens on any of your credit reports is a safeguard against identity theft. Additionally, tracking your credit scores with all three bureaus enables you to be better informed about how your score is improving.
What about free credit monitoring tools?
Apps like Credit Karma and Credit Sesame allow you to monitor one type of credit score — VantageScore 3.0 — which isn’t often used by lenders to determine your creditworthiness. Neither of them give you access to scores from all 3 bureaus. Although they can provide a good baseline for tracking the way your credit score improves, you won’t get the whole picture with a free service.
The bottom line
With all of this in mind, you essentially need to find the maximum level of service at the right price. It’s worth it to do some calculations beforehand. Look at your budget and determine how much you can afford to pay for monitoring. Keep in mind that most consumers only use a monitoring service for a short period of time — usually before a major loan or credit application.
So if you have a specific need, review your budget to see what you can afford for the six months to a year that you want to monitor before you apply. Remember, a little added expense with monitoring ahead of time can save big on the back end once added interest charges start accruing on your debt.
Article last modified on October 28, 2020. Published by Debt.com, LLC