Although there seems to be much greater awareness now about the importance of checking our credit reports periodically, many people still aren’t sure about exactly how to monitor their credit. In this article, I will identify three different ways in which consumers can monitor their credit, and I will also discuss the advantages and disadvantages of each of these three ways.
The first credit-monitoring strategy would be to request all three of your credit reports at the same time. As you are probably aware, you can get a free copy of your credit report each year from each of the three major credit bureaus. (You can claim your free reports by logging on to annualcreditreport.com, which is the official web site supported by the credit bureaus.) The key advantage of getting your three credit reports all at the same time is that you can directly compare them for inaccuracies and inconsistencies. Another advantage of this approach is that you can monitor your credit for free. Also, this approach involves a minimum amount of time, as you would be requesting and then reviewing your reports only once each year. The main disadvantage of this approach, however, is that you will not be eligible for another free credit report for 12 months. Thus, it would be a full year before your next opportunity to identify any inaccuracies or suspicious activity on your report. If you wanted to check your credit a second time during that year (which you most definitely should do), you would have to pay for your three reports. Another disadvantage of this approach is that the free credit reports do not typically include your credit (or FICO) score. The three major credit bureaus will be happy to sell you that piece of information, of course, as will any number of other web sites.
The second strategy would be to order one of your free credit reports every four months. The key advantage of this strategy is that it would allow you to monitor your credit report throughout the entire year, and again, you can do so for free. Additionally, you would have the opportunity to identify any changes or new information on your credit report at four-month intervals, rather than only once a year as in the first strategy. The main disadvantage of this strategy is that you would not be able to immediately compare all three reports at the same time. This means that it might be four or eight months before you recognize any discrepancy between the reports from the different bureaus. A second disadvantage is that this strategy would require you to remember to request your credit reports at three different times each year.
The third strategy is to have your credit report monitored for you by subscribing to one of the many credit-monitoring services. The primary advantage of this strategy is that these services will monitor your credit for you at all three credit bureaus. This is ideal for individuals who do not have the time or the inclination to do so themselves. Another advantage is that these services monitor your credit on a daily basis and alert you about any inaccuracies or unauthorized activity. In this regard they offer superior protection against identity theft, as you could be notified almost immediately of fraudulent activity. The key disadvantage of this strategy is that you will have to pay anywhere from $60 to $180 per year for this service. A second disadvantage is that different companies provide different levels and quality of service. Therefore, it is advisable to shop around and compare various services that are available before signing up for any of them.
Clearly, each of these three methods of monitoring your credit has its own unique advantages and disadvantages. Each consumer must decide for him- or herself which of the three methods is most agreeable to him or her. What is most important, though, is that you do monitor your credit regularly.