How Credit Monitoring Works
Find your way in to a better credit score.
If you want to be financially successful, you need the best credit score possible. Excellent credit means lower interest rates, the best competitive terms, and an easier time qualifying on new loans and lines of credit.
But how do you build credit effectively? And how do you know that the steps that you’re taking are having the right impact?
Credit monitoring is the right answer to these questions.
Finding the right credit monitoring service for you
First you need to choose the right credit monitoring service for you. Not all credit monitoring services are the same. There are free services, paid, services through each individual credit bureau or through an independent third—party company.
Here are some guidelines you should use to make sure you find the right service:
- Make sure the service you choose provides daily monitoring of all three of your credit reports.
- Make sure it also provides scores from the three bureaus, and not just one score.
- Choose a service that offers customizable credit alerts. Ideally, you should be able to see credit alerts via email or text or in whatever method is most convenient for you.
- Find a service that offers extras that are useful for you – balancing cost with the level of service. This may include a credit score simulator, and additional credit scores like your insurance-based credit scores for home and auto.
Fact: Creditors check information from all 3 credit bureaus (Experian, Equifax & TranUnion) so you should, too.
What to expect once you sign up
Once you choose the service that fits your lifestyle the best, here is what you can expect and how you can use credit monitoring to help you build a better credit score:
- Sign up and start looking through the information provided. See where your credit scores are and take note of any negative items on your credit reports that are driving your scores down. Set up your automatic credit alerts so you can monitor activity on your accounts.
- Depending on the service you get, the platform may have recommendations for achieving a better credit score already built in. You can follow these steps or refer to outside resources about how build better credit.
- Start taking steps to improve your credit. Make sure to keep an eye on your credit monitoring platform so you can make sure the steps you take have the positive impact that you wanted.
- If you are building credit to achieve a certain score or to reestablish good credit after bankruptcy or financial distress, you may only need credit monitoring for a limited amount of time. Once you achieve the score you want, you can make the decision to cancel your service.
- On the other hand, if choose to keep the service, you can use it to make strategic decisions about when it’s the right time to get a credit card or take out a loan. Always check your monitoring platform before you apply for any new line of credit. If the platform has any notes of negative items impacting your credit, make sure to take care of those and follow any tips it provides to help maximize your credit.
Can I build better credit without credit monitoring?
Of course you can take steps to improve your credit without knowing your specific credit scores or keeping daily track of what your scores are doing.
True or false: If you request a copy of your credit report directly from a credit bureau, it will include your credit score from that agency.
The credit bureaus will only provide your credit scores for a fee. Downloading your credit report will never provide your credit score.
But unfortunately at best you’ll only be able to make educated guesses about what you can do to improve your credit and how much of a positive impact those actions have.
Granted, doing something positive for your credit should never have the opposite effect, but it will be almost impossible to estimate how much of an impact something has without any reference to your score. This is why credit monitoring is so valuable, because you get a baseline score that you can monitor for changes and progress.