Credit Monitoring

Credit monitoring is a commercial or complimentary service that tracks activity in a consumer's credit files at one or more of the national credit reporting companies. These companies maintain files that include account histories, inquiries, and public records. A monitoring service observes those files and sends alerts when specified changes occur, such as a new account being opened, a hard inquiry from a lender, a change of address, or a new collection account. Monitoring is not the same as credit reporting itself; the credit reporting companies create and maintain the underlying files, while monitoring services watch for changes and report them to the consumer. Monitoring services typically require the consumer to provide personal identifying information and sometimes to authorize access to their credit files. The service may retrieve credit reports or use data feeds from the credit reporting companies. Alerts can be delivered by email, mobile app, text message, or through a website dashboard. Some services monitor all three national credit reporting companies, while others monitor only one or two. Monitoring can detect certain types of activity after it appears, but it does not prevent identity theft or fraudulent accounts from being opened, and it does not correct inaccurate information in a credit file. Correcting errors generally requires a dispute with the credit reporting company or the furnisher of the information under the Fair Credit Reporting Act. Under the Fair Credit Reporting Act, consumers have the right to obtain a free credit report from each national credit reporting company every twelve months through AnnualCreditReport.com. Credit monitoring is a separate offering. Some monitoring is provided by the credit reporting companies themselves, by banks and credit unions, or by third-party companies, often as part of a subscription that may include features such as identity theft insurance or access to credit scores. The usefulness of monitoring depends on the completeness and timeliness of the data provided by the credit reporting companies, and no monitoring service can guarantee that it will detect every change or every instance of fraud. Consumers should be aware that monitoring is a detection tool, not a prevention or correction tool. It cannot remove accurate negative information, create a new credit history, or promise a particular outcome. The Consumer Financial Protection Bureau and the Federal Trade Commission publish educational materials about credit reports, credit monitoring, and identity theft. Reviewing credit reports for accuracy and disputing errors directly with the credit reporting companies or furnishers are separate steps that consumers can take under federal law.

A consumer signs up for a monitoring service and receives an alert that a new credit card account was opened in their name; they then review their credit reports from the national credit reporting companies and, if the account is fraudulent, file a dispute and an identity theft report.