Credit Report and Credit Score Monitoring Plans – Are They Right for You?
Congratulations on managing your credit and debt. It is a great relief to be in control of your credit and debt and it takes commitment and attention to detail to accomplish. It’s that attention to detail that will help you decide if protection plans offered for credit report and credit score monitoring are a good deal for you.
You should review the benefits offered by the plans, evaluating whether you have these benefits already through another source, assessing the price you will be paying for these benefits compared to the price at which they can be obtained elsewhere, and if you can develop a plan to monitor your report and score yourself.
To determine if you should use a plan and if so, which plan best fits your needs you must ask yourself some questions: Why are you monitoring your score? What do you hope to achieve?
If you are monitoring to insure future favorable rates on credit applications or insurance premium calculations, positive employment applications or to defend against identity theft and you do not intend to apply for new credit, new job or new insurance coverages in the near future, you may not need daily monitoring. However, if you have previously been a victim of identity theft you may desire more intensive monitoring.
Many companies offer related plans and differing levels of service. There are even service comparison charts available on-line that do the detailed research for you on benefits, coverage, which credit reports and credit scores are monitored, and most importantly, cost.
Some plans will monitor all three major credit reporting agencies: Equifax, TransUnion and Experian. Others will only monitor two of the three, some only one. Some will monitor daily, some quarterly, and while there are hundreds of credit score variations, not all credit score monitoring services make use of score algorithms that are utilized by lenders during underwriting – and isn’t that ultimately why you’re monitoring your score? Some are free for a limited amount of time (like a 30-day trial) while others range from $179.88 annually to well-over $300 annually.
When choosing, it is important to remember, credit scores are just a snapshot in time of your credit history. Most people think that one’s credit score is a static thing. Simply stated, this is not true. They change with every new charge, balance paid down, new account opened, old account closed, and credit inquiry. Credit Scores are in a constant state of flux. It may be interesting to receive daily e-mails about the constant changes in your credit score, but eventually you come to realize there are no drastic changes in such a short term and the cost of these plans and the benefits offered vary widely in value comparisons.
Of course, if you have previously been a victim of identity theft and you think that your information has once again been compromised your priorities may be different than the average consumer. The vast majority of identity theft is perpetrated by someone close to the victim. In most cases, people are unwilling to file a police complaint against a child, sibling, parent or friend and they work out the repayment on their own and accept the credit fallout. Without a police report, many creditors and plans will refuse to take up your claim. Consult your Credit Advisors Foundation certified credit counselor for more information on reporting and resolving identity theft.
In order to monitor your credit record yourself it is important to know that certain consumer protection laws allow you free access to your credit report from the three major credit reporting agencies annually. Claiming your rights under the law in a DIY plan may be the best use of your available resources. For example, www.annualcreditreport.com is where current laws allow you free access. Strategic use of this availability will allow you to pull one report to review (Experian, for example), wait four months, then pull a report from the next source (let’s say, TransUnion) and finally, wait an additional four months and pull a report from the final agency (in this case, Equifax). Once you’ve pull one report, you can review it for errors and file any necessary complaints to resolve any inaccuracies with that agency. Once your complaint is submitted appropriately under the law, that credit reporting agency must made your concerns known to the other two agencies so they can address the issue as well. If you are unsure about the self-monitoring process, consult with a certified credit or housing counselor to help you understand the process and develop any necessary skills (like reading and understanding your credit report, understanding how credit scores are calculated and the financial management behaviors that support high scores) to allow you to complete your credit report reviews.
Finally, these recommendations always come back to what is right for you and your financial situation. Most consumers can focus on score building behaviors, allowing their day-to-day credit and debt management decisions to support a favorable high score. To learn more about self-monitoring your credit report, contact your friendly credit counselor at Credit Advisors Foundation.
Good luck with your continued financial management efforts.