Why You Need to Monitor Your Credit Continuously

By Kevin Mercadante

Many people assume that the information on their credit reports is all good because they pay their obligations on time and always have. While that’s the basic way credit reporting works, it isn’t without its flaws.

Different organizations can put information on your credit report, and not just the ones you have an ongoing business relationship with either. Information can come and go on your report and you’ll never know that it does or when it will happen. The only way to know for sure what’s happening is by checking your credit reports on a regular basis.

Most people are most concerned about their credit scores, and there are a few ways to check your scores without incurring expense in doing so.

But apart from your credit scores, there is other information that you need to monitor on your credit report.

Creditor Errors

You may have an excellent payment record with a given creditor, but there can still be reporting errors. For example, let’s say you’ve had a car loan for the past two years with an excellent pay history. A keystroke error could lead to the reporting of a 60 day late 5 months ago that could cause your credit scores to fall by 50 points for a single delinquency—one that never happened. Unless you know about it, you won’t be able to do a thing to fix it.

credit monitoringAnother event that’s not at all unusual is reporting of collection accounts. Let’s say you’ve had dealings with a medical provider and paid all that you were billed for. There may have been a small bill at the tail end, as little as $50, that the provider fails to bill you for. As time goes by, the medical provider enters the amount as an unpaid collection, and now you have a derogatory entry on your report. This was never reported to you, and unless you get a copy of your credit report you will never know about it.

Identity Theft

Typically, if you’re the victim of identity theft you’ll know about it. But patterns can emerge on your credit report that can tip you off a head of time.

Your credit report can reveal an attempt to obtain credit that you never initiated, and even though the thief hasn’t been successful to date, it’s an indication that he has access to enough of your information to apply for credit in your name. Only with regular monitoring of your credit report will you know this is happening.

Mistaken Identity

If you have a common name, like John Smith or Mary Jones, it’s not out of the question that credit information from others with the same name might appear on your credit report. Often this happens if you’re a namesake, such as John Smith, Jr. Your father’s information could end up on your credit report.

Even if the information on the namesake’s credit is excellent, the fact that debts that are not yours are on your report will increase your obligations, possibly seeing you be denied fresh credit in the future.

If you know about this in advance, you can have it corrected before it becomes a problem.

Why You Need To Check Your Credit From All Three Credit Repositories

Here’s an often overlooked fact of monitoring your credit reports: there are three credit repositories, Experian, TransUnion and Equifax, and you must get information from all three in order to have an accurate picture of your reported credit profile.

Creditors will often report only to one or two of them, and if you only monitor one repository, you can miss what the others have in their reports.

How Frequently Should You Check Your Credit Reports?

At a minimum, you should obtain a copy of your credit report at least once a year. You might do it more frequently if you plan on obtaining credit or applying for employment or for an insurance policy. Your credit profile can have a major affect on all three activities, and it’s always best to do any necessary clean up act before the fact.

What often stops people from monitoring their credit reports is cost. But you can get free credit reports from sources that will enable you to get copies of your report without concern for cost.

Credit reports are becoming more important all the time, and since the information that it contains happens mostly without your consent or awareness, keeping an eye on it regularly will enable you to fix little problems before they become bigger ones.
Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.

About Justin B

Justin is the co-owner and grammarly impaired author of My University Money and Young and Thrifty. If you like what you read, consider signing up for email updates.

11 Responses to Why You Need to Monitor Your Credit Continuously

  1. Since I can get a report from each bureau on annualcreditreport.com I space them out equally every 4 months. That way I can make sure nothing crazy is going on.

    • Jesse says:

      Same here.

      The phrase, “if you plan on borrowing money in the near future” should be tacked on to the end of this article’s title.

  2. krantcents says:

    Continuously may be an overkill, but routinely is good!

  3. mycancukbuck says:

    That reminds me – I need to get on that. I’m always so impatient and just pay the fee to do it online – the truly frugal thing would be to fill out the form and do it manually.

    • Rachelle says:

      You can get a report by mail for free, but it won’t include a score. Still useful to check for errors, though.

  4. I did it. I’m so glad I did. A creditor who told me I wouldn’t be reported subsequently reported me, but then I was able to request a goodwill gesture and they removed it. So many people have identity theft happen to them and don’t even know it. I like annualcreditreport dot com, too.

  5. Rachelle says:

    Does annualcreditreport.com operate in Canada now? The Industry Canada website refers only to Equifax and Transunion: http://www.ic.gc.ca/eic/site/oca-bc.nsf/eng/ca02197.html

  6. Monitoring your credit card alone will help you save at least a fraction of what you might have spent on something you may not really need.It is a way to block a financial leak

  7. Raj Dhawan says:

    Great article Kevin ! Yes, credit scores are very important, and so it is necessary that we look into our credit scores atleast once a year to confirm that all the data in there is correct.

    Are there any online sites that will give you your credit scores instantly and for free, and without dinging you for it with -50 points ? Most free credit reports either have a catch, are trying to sell you something, or else send you your scores in the mail. If there are, can you please email me the link ?

  8. We check our credit reports from all 3 reporting bureaus once a year. I like to go over every little bit of information just to make sure it’s accurate. It’s amazing how many people don’t bother to check.

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