An essential part of managing your finances, whether personally or for your business, is keeping track of your credit score. There are lots of online check report providers now available, where you can easily and quickly check your score. Some also provide a credit monitoring service. Here we will take a closer look at what a credit monitoring service is and how it can benefit you.
What is Credit Monitoring?
So, what is the difference between a credit check and credit monitoring? A credit check calculates your credit score, which is the probability that you will repay a line of credit or debt and is calculated by looking at your financial history and credit accounts. Your final credit score is based on key points, debt, type of credit, payment history, and recent credit applications. The ideal credit score in the Experian system is somewhere between 880-960, which is considered good, and over 960 is excellent. Your credit can assist you in getting a loan for a new car or your dream home and is one of the most important indicators of your financial health.
Credit monitoring works by tracking the transactions and behaviour of a borrower. This type of financial monitoring works by monitoring your creditworthiness and any changes in your score and by keeping an eye out for possible fraud or unusual transaction behaviour. For example, if your credit card is stolen and then used, a credit monitoring service detects the different buying patterns and alerts the credit card account holder. Some of the leading credit report and monitoring agencies include Experian and TransUnion.
How to Use Credit Monitoring
Your credit score often plays a part in the most important moments of your life. However, you don’t always know your credit score until it matters or when you have a problem. Unfortunately, your credit card credentials are a prime target for online thieves, and their attacks can have real consequences, especially on your creditworthiness in the future. There are many reasons to keep up to date with your credit score, here are just two ways to make the best use of a credit monitoring service.
Applying for Credit
Before applying for credit of any kind, understanding your finances and the likelihood of a bank approving your application is essential. Checking your credit is the critical first step when applying for the most significant financial decision you can make, applying for a mortgage. For example, with an online mortgage adviser such as Trussle, one of the first steps when applying for a Mortgage in Principle is a soft credit check. The benefit of a soft credit check is that only you will see searches on this report, and it won’t affect your rating score. Credit monitoring services will help you when you are trying to improve your score to qualify for a home loan, keeping you up to date with the quality of your credit and notifying you when you have reached your credit score goal.
Keep in mind, however, that the score given to you by a credit check provider may be slightly different from the score the mortgage broker pulls will provide, but it is generally close enough.
Protect your Identity and Assets
Another upside of using a credit monitoring service is to ensure you are protected against fraud and identity theft, especially crucial for businesses of all sizes. Individual credit has become a prime target for fraudsters, scammers, and identity thieves. That’s why credit monitoring is so important. Criminals and fraudsters carry out a number of activities related to identity theft using your credentials, including illegal purchases, whether online or in retail stores. Since bad actors use your credit information without your knowledge, it is often difficult to detect until it is too late and your credit score has already been ruined.
There are not as many options for credit checks and monitoring providers as for personal credit. Still, there are a few options that offer full reports and comprehensive tracking for protection against fraud, including tailgating, baiting, phishing etc. The best credit monitoring solutions will notify you if there are any changes in your credit activity if a new account is opened or large purchases are made. With services like Equifax Business Credit Risk Score, for example, you can choose from several accounts, offering features that notify you of significant changes on your credit report along with identity theft protection in the case of fraudulent activity.
Credit monitoring services often offer full tracking of credit scores, keeping you up to date with your credit and allowing you to plan ahead and repair any credit issues. Therefore, it is clear to see that credit monitoring is beneficial in many aspects of life. It can be a valuable tool to protect you and supports you during one of the biggest decisions in your life.