What is Credit Monitoring and Do You Need It?

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Anthony Aguilar

VP, Customer Operations at Aura

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    What Is Credit Monitoring? Do You Really Need It?

    Your credit score is one of the most important indicators of your financial health. Strong credit can help you buy your dream home, get a loan for a new car, and ensure that you can pay your bills during hard times.

    But if identity thieves gain access to your personal information, they can destroy your credit — and leave you in debt, owing thousands of dollars.  

    According to the Federal Trade Commission (FTC), more than 363,000 Americans had fraudulent new credit cards opened in their names last year [*]. 

    Your credit is a prime target for fraudsters, scammers, and identity thieves. That’s why credit monitoring is so important. 

    Credit monitoring services actively monitor your credit and alert you quickly to any signs of fraud. 

    In this guide, we’ll explain what credit monitoring is, how it works, and whether you actually need to pay for a credit monitoring service (and which ones you should consider). 

    What Is Credit Monitoring?

    Credit monitoring includes tools that track your credit report and alert you of any changes, inquiries, or new accounts. These efforts help prevent fraud. 

    When you apply for a new credit card, auto loan, or mortgage, the lender runs a credit check to see if you have a history of paying back your debts. A good credit score helps enable you to easily take out loans — but it also makes you an attractive target for criminals. 

    Even worse, it’s now easier than ever for scammers to get the personal information they need to steal your identity. They could scam you with a phishing email or simply buy your information on the Dark Web after a data leak.

    With your personal information, an identity thief can:

    • Take out loans in your name.
    • Open lines of credit at banks and other companies. 
    • Max out your credit card or open new cards in your name.
    • Scam companies into giving you credit without your knowledge.

    In the past year, four in 10 Americans reported that someone tried to open, or successfully opened, a credit card or bank account in their name [*]. 

    Credit monitoring acts as an alarm to let you know of any credit activity — usually within a few hours, but sometimes even quicker.

    How Does Credit Monitoring Work?

    The best credit monitoring services track your credit reports at all three major credit bureaus — Experian, Equifax, and TransUnion. 

    But what are they looking for? 

    The main benefit of credit monitoring is being alerted to suspicious activity on your credit report. For example, your credit report includes: 

    • All open credit accounts and loans, and how much you owe on them.
    • Hard credit inquiries, which are run on your credit when applying for a loan or credit card.
    • Payment history, including all missed and late payments.
    • Any new or old bankruptcy filings in public records.

    If criminals open new accounts, steal your credit card numbers, or request hard inquiries on your credit file, a monitoring service will alert you.

    Javelin Research report on identity fraud in 2022
    Losses from identity fraud jumped to over $23 billion in 2021. Source: Javelin Research

    Credit monitoring services can also: 

    • Alert you of changes in your credit score. If an identity theft goes undetected for longer than six months, it can significantly impact your credit score.
    • Send you alerts about suspicious bank transactions. If scammers have access to your bank account numbers and details, they could make fraudulent purchases or drain your accounts. 
    • Track changes to your bank account or home title. Some credit monitoring services can alert you if criminals are trying to take possession of your home through deed fraud.
    • Enable you to instantly lock and unlock your credit file. Locking your credit file is one of the best ways to protect yourself from financial fraud. But it can be a time-consuming task to perform manually. Aura lets you instantly lock and unlock your credit file with just one click. 
    Aura one-click credit lock
    Aura lets you quickly lock and unlock your credit file to protect it from scammers. Source: Aura

    The fine print: Not all credit monitoring solutions — paid or free — include all of the mentioned services and can vary in their coverage. Make sure you understand how you’re protected before signing up.

    💡 Related: Is Identity Theft Protection Really Worth It? →

    Who Needs Credit Monitoring the Most?

    The scary truth is that everyone is vulnerable to identity theft and can benefit from credit monitoring. 

    But there are specific groups that are particularly at risk. These include:

    • The elderly: Seniors are one of the most common targets of identity theft. In 2021, the Federal Bureau of Investigation’s Internet Crime Complaint Center (FBI’s IC3) received 105,301 complaints from victims over 60 [*].
    • Young adults: According to The New York Times, 20-somethings are more than twice as likely to lose money to fraud than senior citizens [*]. 
    • Children: Children are issued Social Security numbers (SSN) immediately after birth. Credit monitoring is one of the only ways to help prevent child identity theft.
    • Military personnel: Deployed service members and their families are susceptible to fraudulent activities. 
    • Prior identity theft victims: Everyone whose personal data has been leaked in a data breach should monitor their credit.

    💡 Check to see if your personal information was leaked online using Aura’s free leaked password and Dark Web scanner:

    Aura leaked password scanner

    The 7 Main Benefits of Monitoring Your Credit

    1. Early detection of identity theft and fraud
    2. Near real-time alerts about changes to your credit score
    3. Credit report monitoring at all three credit bureaus
    4. Locking and unlocking your credit file
    5. Receiving transaction alerts that could signal financial fraud
    6. Credit score protection (which can also save you money)
    7. Warnings about deed fraud and change-of-address scams

    Monitoring your credit health on a regular basis has benefits that go beyond preventing fraud. 

    1. Early detection of identity theft and fraud

    There were 5.7 million fraud incidents in 2021 [*], and that number continues to rise. Credit monitoring is a powerful tool for identifying and avoiding fraud attempts or identity theft. 

    A credit monitoring service alerts you about the opening of a new account. If you don’t recognize the account, you may be the victim of identity theft.

    Identity theft can affect your credit when criminals stick you with unpaid bills and past due accounts.

    Monitoring tools allow you to spot these attempts quickly and avoid devastating consequences. 

    💡 Related: What Is Credit Protection? Are You Making The Most Of It? →

    2. Near real-time alerts about changes to your credit score

    Changes to your credit score can be major red flags indicating that you’re the victim of identity theft. Credit monitoring tracks those changes and helps you understand exactly what impacts your credit score. 

    For example, payment history — how quickly and consistently you pay back debts — makes up 35% of your credit score (according to credit scoring models developed by FICO® and VantageScore®).

    If a criminal takes out a loan in your name and doesn’t pay it back, this can severely damage your credit score. Payments that are 30+ days past due could cause your credit score to drop by 100 points or more [*].

    3. Credit report monitoring at all three credit bureaus 

    There are three major credit bureaus — Experian, Equifax, and TransUnion. While some lenders run credit checks with all of them, some don’t. 

    Without triple-bureau protection, it’s possible to miss fraudulent activity or errors that appear on the credit reports that are not being monitored. If you apply for a loan and a lender pulls a file with errors, this may jeopardize your approval odds.

    However, most free monitoring services (and even some paid services) don’t offer reports from all three credit bureaus unless you pay a premium price.

    4. Locking and unlocking your credit file

    A credit lock prevents unauthorized access to your credit reports and can reduce your chances of becoming a victim of identity fraud. 

    Some credit monitoring services allow you to lock and unlock your reports anytime you want — meaning you can easily keep them locked when not in use.

    5. Receiving transaction alerts that could signal financial fraud

    A credit monitoring service can also alert you to suspicious transactions in your bank account — especially if these surpass a certain limit. If you don’t recognize the activity, you can immediately take action.

    Prompt notifications can help you prevent financial fraud by spotting these transactions quickly.

    6. Credit score protection (that can also save you money)

    Your credit score impacts more than just your ability to take out loans. 

    A damaged score can require that you pay more for insurance rates or get stuck with higher interest rates on mortgages and loans. Credit monitoring services let you keep track of your credit score so that you can dispute any incorrect information and keep your credit rating healthy. 

    💡 Related: 10 Ways to Prevent Credit Card Fraud →

    7. Warnings about deed fraud and change-of-address scams

    Credit monitoring doesn’t just protect your credit score — it can also safeguard major assets such as investment accounts and home titles. 

    Deed fraud is the illegal transfer and recording of a property without the consent or knowledge of the legal owner. Some credit monitoring services will monitor public records and alert you if anyone is trying to steal your home. 

    What Doesn’t Credit Monitoring Cover?

    The biggest downside to most credit monitoring services is that they only “monitor” your credit. 

    Most credit monitoring cannot:

    • Completely protect your personal data from hackers. 
    • Prevent someone from using your name to apply for credit. It can only alert you about inquiries that appear on your credit report.
    • Fix your credit report inaccuracies. You should review your credit report regularly to protect your score.
    • File a fraud report on your behalf. Monitoring services can alert you, but they cannot take any action on your behalf.

    With Aura, you get proactive protection against identity theft and fraud as well as hands-on support if you become a victim. Along with credit monitoring, instant credit lock, and identity theft protection, every Aura plan includes: 

    • 24/7 access to a team of White Glove Fraud Resolution specialists. 
    • $1,000,000 in identity theft insurance to cover eligible losses due to identity theft.
    Aura white glove fraud resolution specialists
    Aura protects you against fraud and supports you if you become a victim. Source: Aura

    The Best Credit Monitoring Services of 2022

    Credit monitoring services come in various forms — with limited free tools to premium services that include identity theft protection, digital security, and insurance. 

    When considering the best credit monitoring services of 2022, we looked for services that offered: 

    • Three-bureau credit monitoring
    • Transaction monitoring with near real-time fraud alerts
    • Trustworthy companies with good user reviews
    • Balance between features and costs
    • 24/7 fraud resolution teams to help walk you through the process of recovering from fraud
    • Identity theft insurance to cover the costs of fraud
    • Other digital security features that proactively help prevent fraud from happening (such as Dark Web monitoring, antivirus, and online account protection) 

    Based on those features, here are five credit monitoring services that you should consider: 

    Aura — All-in-one digital security with the fastest fraud alerts

    Aura mobile dashboard

    With 4x faster fraud alerts than competitors, Aura is your go-to service if you want to stay ahead of potential threats. Aura includes three-bureau credit report monitoring, Experian credit lock, transaction monitoring, and more financial tools to keep your money and assets safe. 

    With Aura, you also get a full suite of identity theft and digital security tools. This includes:

    • #1- rated Identity theft protection for your entire family 
    • Social Security number (SSN), Dark Web, and public record monitoring to protect your identity
    • Antivirus software and a Virtual Private Network (VPN) to protect your devices from hackers 
    • $1,000,000 insurance coverage for eligible losses due to identity theft 
    • 24/7 U.S.–based fraud resolution specialists 
    • 14-day free trial and a 60-day money-back guarantee

    Identity Guard — AI-powered identity theft protection and credit monitoring

    Identity Guard uses artificial intelligence to constantly scan and monitor for new threats against your identity and financial information.

    In case of an identity breach, Identity Guard will notify you promptly through a mobile app or email. 

    Identity Guard’s Ultra Plan includes: 

    • Three-bureau credit monitoring
    • Bank account takeover monitoring
    • Credit and debit card monitoring
    • 401k and investment account monitoring
    • Home title monitoring

    In the news: Identity Guard was recently ranked as the top identity and credit protection service by Forbes Advisor.

    Credit Karma — Free (but limited) credit monitoring

    Credit Karma offers free credit monitoring along with aggregated annual credit reports from two of the three main credit bureaus. It can also quickly alert you to major changes, such as a new credit application filed in your name. 

    Credit Karma allows you to dispute errors on the TransUnion credit report directly through its app or website. It is worth noting that you can’t monitor and report any errors on your Experian credit report through this service. 

    Norton LifeLock — Established (yet problematic) identity theft protection

    Norton’s LifeLock was one of the first identity theft protection services to be offered and still provides good protection against financial fraud and identity theft.

    Lifelock only includes three-credit bureau monitoring on its pricey “Ultimate Plus” plan. Its top-tier plan also includes bank account and credit card activity alerts, home title monitoring, and TransUnion credit file lock. 

    Lifelock has unfortunately faced some serious security issues in recent years. 

    The company has paid over $100 million in fines due to misleading marketing and a failure to secure user data. In 2022, Lifelock came under fire for automatically installing cryptomining software on users’ computers — a common feature of modern malware.

    📚Read more: Aura vs. LifeLock Comparison: 2022 Showdown →

    PrivacyGuard — High-priced credit protection

    PrivacyGuard is another good credit monitoring and protection option, but it lags behind the other services due to higher costs. 

    PrivacyGuard’s credit protection plans start at $19.99 a month and only include  monthly three-bureau credit score tracking and daily monitoring. For bank account, debit, and credit card monitoring (as well as identity theft insurance), you’ll need to upgrade to their $24.99/month Total Protection plan. 

    Are Free Credit Monitoring Services Worth It?

    If you don’t have the budget for a premium service, there are still many benefits to signing up for free credit monitoring services. 

    For instance, CreditWise provides you with your credit score from TransUnion every week, as well as credit report updates from TransUnion and Experian in real-time. CreditWise also offers limited Dark Web scanning and SSN tracking.

    Free monitoring services also include the credit score simulator which checks the potential effect that specific actions — such as closing a credit card or paying off debts — may have on your credit score.

    However, you won’t get identity theft insurance, access to triple-bureau monitoring, or the other essential credit protection and monitoring features included with a paid service.

    The Bottom Line: Do You Need Credit Monitoring?

    The honest truth is no. You don’t need credit monitoring. 

    On your own, you can:

    • Check your bank statements regularly and review your activity.
    • Rely on your credit card companies’ and financial institutions’ fraud alerts (if they offer them). 
    • Review your online credit card statements monthly, and work to keep your credit card information safe online.
    • Set strong passwords and use unique passwords for all your accounts.
    • Be on a constant lookout for the warning signs of identity theft.
    • Manually freeze and unfreeze your credit when you need to use it.  
    • Request a free credit score report from AnnualCreditReport.com to check for fraudulent activity in your credit history.
    • Protect your devices from hackers by using antivirus and a VPN.
    • Dispute fraudulent information and transactions in your credit file.

    But the question you have to ask is: Do you want to do all this work yourself? (And do you trust yourself to keep up with it?)

    Credit monitoring services like Aura do the work for you.

    Aura works tirelessly in the background to protect your personal finances and identity — so you can enjoy peace of mind and focus on what’s most important to you in your life. 

    Keep your credit and identity safe from scammers. Try Aura free for 14 days!

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    1. Financial identity theft and fraud
    2. Medical identity theft
    3. Child identity theft
    4. Elder fraud and estate identity theft
    5. “Friendly” or familial identity theft
    6. Employment identity theft
    7. Criminal identity theft
    8. Tax identity theft
    9. Unemployment and government benefits identity theft
    10. Synthetic identity theft
    11. Identity cloning
    12. Account takeovers (social media, email, etc.)
    13. Social Security number identity theft
    14. Biometric ID theft
    15. Crypto account takeovers