People commonly ask, “Why is credit monitoring important?” Just as many people ask, “What even is credit monitoring?” The list below is of the top 5 reasons credit monitoring is important to you, and it is an excellent starting point for answering both of these questions, and more.
1. First Line of Defense Against Identity Theft
In a world that has become exceedingly digital, it is more important than ever to be aware of potential identity theft. There are many steps that can be taken in order to prevent identity theft, as can be seen outlined here, but the first, and easiest, step is to sign up for trustworthy credit monitoring.
2. Being Aware of Fraudulent Activities
Keeping the threat of identity theft in mind, credit monitoring tracks all credit-based activity and will send alerts when suspicious or unusual activities arise. Credit monitoring can often be set up to send alerts for every credit-based transaction, so if any mistake or unwarranted charge occurs it will not go unnoticed. An example of this is when banks send their customers alerts for every transaction made from particular accounts.
3. Knowing Your Credit Score
Perhaps the most common use of credit monitoring is the tracking of personal credit scores. A person’s credit score can dictate so much of a his or her life that it is imperative to be aware of what is going on. Credit scores fluctuate based on numerous factors, many of which often go unnoticed, which often leads people to mistakenly think they have good credit when they do not. Seeing how credit scores directly affect one’s ability to get a loan, apply for a credit card, or even get a job, it is clear why it is becoming more and more important to use a reputable form of credit monitoring.
4. Different Effects of Loans, Credit Cards, and Other Debts on Your Credit
Many people know about credit scores and even the ways in which a credit score can affect daily life, but many people also overlook how differently various things affect a credit score. When using credit monitoring, a person can track how a student loan affects his or her credit score as opposed to a low-limit credit card or a car payment. Understanding the differences in how particular debts affect a credit score can lead to a better overall awareness about what it means to have good credit.
5. Planning for the Future
Once a solid understanding is established of what credit monitoring is and why it is so important to have and maintain an excellent credit score it becomes easier to look ahead, and to plan for the future. Planning for the future can mean many things, but when it comes to the world of credit and finance it tends to refer to investments and plans for retirement. It is nearly impossible to tackle the world of investments without a sound awareness of one’s credit score and credit history, but with active and vigilant credit monitoring the future becomes much easier to prepare for.