Monitoring Your Credit Report Intelligently

Your credit report represents the center of your financial life, the proverbial “permanent record” that illustrates your ability to pay your debts, honor your fiscal commitments, and otherwise act in a responsible way regarding finance. It is also the battleground between identity thieves and the people they attempt to steal from, and constantly monitoring your credit reports helps to keep these predators at bay.

Maintaining a close eye on your credit report serves a number of other purposes, too, from catching errors—either your own or your creditors’—to simply keeping track of accounts you might not have used in a while.

Defining Suspicious Activity

People talk about credit monitoring all the time, but just how does one “monitor” this data? Here are some things to look for that could represent suspicious activity:

• New inquiries on your report: If a company you have had no dealings with is sending inquiries about your credit status, it could be an early sign that someone is using your name to open an account with them.

• Accounts you don’t recognize: This is perhaps the biggest indication that your credit has been compromised. Any account you don’t know about needs immediate attention and (most likely) closure.

• Late payments: If an account you have not used for a long time falls into the wrong hands, you may find out once you start receiving late notices. But if you have moved or the company is otherwise unable to reach you, catching notifications that make your credit report may be your only clue.

• New addresses or employers: Changes like these may indicate that your legal identity—namely your Social Security number—has been stolen and is now serving as someone else’s, too.

• Anything else out of the ordinary: Credit reports are complicated, comprehensive documents. When reviewing yours, read it thoroughly and investigate anything out of the ordinary.

Other Reasons to Monitor Your Report

Sometimes we make mistakes. You might forget to pay the last month of a cable bill once you move to a new place. Or perhaps you neglect a medical bill that you thought was covered by your insurance company. Or maybe the insurance company should have covered it, but through a clerical error neglected to do so. These are additional problems you can catch by frequent scans of your credit report, and the sooner you catch them, the better your financial health.

You might also have accounts missing from your report. While most will be listed, some credit unions, department stores, and other financial entities aren’t very diligent about sending their data to the credit reporting agencies, particularly if you pay on time. Having all of your accounts listed provides a complete financial picture, and missing accounts leave holes in that picture. Particularly when your history is clean, having every account listed can only improve your credit outlook.

Finally it’s good to know what accounts you have out there. Many of us open accounts when we are young, then stop using them as we grow older and move on to other financial tools. Those early accounts often stay active, however, and provide a certain degree of financial strength; after all, additional lines of credit, when used responsibly, strengthen your credit rating. And any activity on these accounts is a sure sign of fraud—after all, if you haven’t used them in years, no one else should have, either.

Frequency of Credit Monitoring

Credit reports are fluid documents, liable to change within a relatively short period of time. As such, looking at your report once a year isn’t enough—as each of the credit review companies will send you a free credit report every year, request one about every three months, paying the required fee to the credit company for the last one. Buying a credit report will generally cost you less than $20, but your peace of mind will be worth it.