Fraud is on the rise. So, people must be careful and informed about their finances. Monitoring credit information for discrepancies or errors is important. It helps manage a person’s credit information. It also helps build their credit score. Credit monitoring services thus safeguard a person’s credit information.
Why does monitoring credit hold relevance in tracking a customer's credit information? Continue reading this article to understand credit monitoring.
What is Credit Monitoring?
Credit monitoring meaning implies tracking changes in a borrower’s financial behaviour. It identifies any fraudulent or suspicious activity and reports the same. Examples include buying new credit cards and new loans.
Credit monitoring services notify banks and other lending institutions of any possible fraud. Also, about any change in a borrower’s creditworthiness. These services help a borrower manage their personal credit information and credit score. For example, a person can assess whether they can get a new loan via credit report monitoring.
Credit monitoring means safeguarding a person's credit information. The service provider sends alerts when any unusual activity takes place. For instance, alerts are sent if a customer's personal information gets stolen. Otherwise, the information is used without customer permission to commit fraud.
Benefits of Credit Monitoring
The need for credit monitoring arises due to its many benefits, as seen below:
Prevents identity theft
Monitoring credit prevents identity theft. Identity theft is a very serious issue if left undetected. Identity theft should not exist for a long time. It leads to wrong credit information and low credit score. It impacts a customer's creditworthiness. So, monitoring credit helps spot any such issues. It saves people from becoming a victim of identity theft.
The top credit monitoring services help prevent identity theft and personal information misuse. These services safely manage a customer's credit information. They report any unusual change in customers' financial information to the credit bureaus. The service provider charges a fee for the service rendered.
Personalized alerts available
People who avail of credit monitoring services get customized alerts. These alerts relate to any suspicious or fraudulent activity in their financial transactions. Some monitoring services offer comprehensive services, including customized reports, notifications, and alerts. For example, borrowers can get alerts when they buy through their credit card. Such transactions get reported to lenders and credit bureaus. This prevents criminals from carrying out fraudulent transactions.
Such alerts make them aware of any fraudulent activity they may not have undertaken. These activities could, otherwise, impact their finances or credit score. The alerts make customers more careful about their financial activities.
Helps financial planning
Lack of financial management is a major reason for a low credit score. Monitoring credit helps plan financial activities. Customers can better manage their credit activities. It helps financial decision-making. It also prevents fraud. Monitoring credit helps check credit health by taking corrective measures to maintain creditworthiness.
How Does Credit Monitoring Work?
Credit monitoring meaning implies protection against identity theft. Customers can track credit by themselves. Still, getting the services of a service provider makes managing credit information easier.
The automated system provides detailed credit information reports within a short time. Monitoring credit services ensure proper tracking of a customer’s credit report. Such services regularly track a customer’s credit history. They identify fraudulent activity by tracking their financial behaviour.
These services provide alerts of changes through email, SMS, or phone call. Customers thus get immediately notified of their credit activities. Such activities include buying new credit cards and new loan accounts.
They report any inconsistencies or suspicious activities in the credit report to the credit bureaus. The customers can thus rectify any errors in their credit reports. It helps a customer build their credit scores.
Otherwise, discrepancies in the credit report impact their credit scores. It impacts their potential prospects of getting a loan or credit card approved.
Factors to be considered for Credit Monitoring
Factors considered while credit monitoring means to
- Verify whether there is a change in the customer’s name in the credit report
- Verify whether the customer's address has changed
- Verify a customer's loan or credit card accounts. Tally the same as the numbers in the credit report.
- Verify whether there is a change in the customer’s age in the report
- Verify whether the credit report mentions any default on a loan or a credit card payment. The customer has no previous knowledge of such defaults.
Can Credit Report Monitoring impact CIBIL Score?
Monitoring credit does not negatively impact a customer’s CIBIL score. If a customer checks their credit report, it is a self-tracking of information. So, it has no impact on their CIBIL score. Monitoring credit reports is a soft inquiry or a soft pull. A soft pull means that it is a personal credit report.
A soft inquiry differs from a hard inquiry that banks and other lenders undertake.
A hard inquiry reviews a potential customer’s loan or credit card application. Such inquiries get shown to other lenders as new loans or credit cards. This is because the information does not get reflected in the credit report. If there are too many hard inquiries, they could lower the credit score of a customer.
Conclusion
Monitoring of credit helps identify future events of fraud. The service helps a customer manage their financial health. It also reduces the possibility of credit fraud and identity theft. They can check for any change in their credit report or credit score. Any discrepancies are reported to the credit bureaus. Monitoring credit helps a customer take remedial action on time. Customers can ensure that their financial information is safe.
Yet, it does not guarantee future incidences of fraud. Criminals may continue to hack into customer data and perform identity thefts.
There is no way to prevent fraud completely. Still, a customer can avail personal loan from credible lenders like Tata Capital. Taking loans from trusted sources helps customers undertake proper financial management. It also gets them better loan terms. For more details, visit the Tata Capital website.
29 November 2022
5 mins read
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