Credit monitoring refers to the mode of tracking changes in your financial behaviour to notify the lending institutions about the potential fraud and changes in your credibility. For instance, credit monitoring can protect you against any identity theft, when your personal information or data is stolen and utilized without your permission for ruthless purposes. If any of your cards is stolen, conducting credit monitoring will assist you to identify distinct purchasing patterns by sending alerts to you.
Advantages of credit monitoring –
Assists in planning out your finances in advance
Not properly planning and managing your finances can make a lot of things tough for you over the long term. It is one of the major reasons for having a low credit score. Credit monitoring service alerts you regarding the changes to your score and this knowledge assists you in endowing a good understanding about how your activities linked with finances can impact your credit score. Also, it will assist you to make a good financial decision. Apart from this, you will even be able to examine your credit health, your financial activities, recognise the incorrect areas where you are spending your money and understand ways how you can implement righteous measures.
It can assist you to prevent any identity theft
Note that identity theft is an extremely serious issue that may go undetected in case you do not keep a close watch. Longer the time-period the fraud persists, lower will be your credit score on your credit report. To avoid facing such a scenario, you must take the assistance of credit monitoring services to better manage your credit with the reporting agencies instantly in no time. To get this service, you must pay a few additional funds to the credit monitoring agencies for such details and information.
You may customise alerts
Some of the credit monitoring companies offer you a comprehensive service. You may customize the alerts and notifications that you may receive. For instance, you can select to get a notification whenever there is any specific suspicious buy through your credit card or if you are placing an application for any credit option, then you can send the info on the best rates based on your financial condition and requirements.
Impact of timely credit monitoring on your score
Credit monitoring doesn’t impact your score. If you as a consumer access your credit score, then it will not have any negative impact on your credit score. Timely reviewing or assessing your credit report results in soft inquiry or soft pull, which means it may be viewed on your credit report. When you as a consumer apply for any credit product type like credit card or loan, the lender assesses your credit report and adds in a hard enquiry to your report. Note that even if you miss out on repaying a single loan or EMI repayment, the bureau will add this in your report and lower your credit score. The credit bureau will also add you in the CIBIL defaulters list, which may discourage lenders or issuer to provide loan or credit card in the future. So, you must ensure to check your credit report manually at least 2-3 times a year to know about your financial standing and take effective measures accordingly.
What are the benefits of monitoring your credit report?
∙ It enlightens you about any changes in your history and changes in your credit score based on your credit behaviour.
∙ Possibility of identity theft and credit fraud is curtailed by proper monitoring.
∙ Alerts to regularly check your report allows you to understand your activities like credit inquiries, credit history, record of public nature, delinquency and also other negative information.
Credit information bureau or CIBIL is one of the crucial players in the financial industry. It was introduced in August 2000. This credit bureau allows many lenders and financial institutions to provide loans and credit cards to you and also assist you manage your day-to-day credit activities with ease as you too can fetch your credit report to understand where you stand.
CIBIL monitors your credit behaviour, maintains records of your financial day to day transaction history linked with credit card, or loans availed from any of the lending institutions. With such information like your financial transaction history, mix of credit, personal details mentioned, direct credit enquiries, CIBIL determines your credit score on the report. This credit score allows the financial institutions and lenders to offer you with a loan or credit card. This is because through your credit report, the lender gets to know about your repayment capacity.
Also Read: Credit Monitoring
Frequently asked questions (FAQs)
1) What is meant by credit monitoring?
Credit monitoring assists you to understand your credit history and protects your identity too. It assists you to know your score and understand your financial standing. In case your credit score is low i.e., below 750, then you can improve it by taking the apt credit improvement measures and become eligible for future credit.
2) How quickly can you avail credit reports?
As soon as you apply for the loan and make the repayment of the same, your credit report is created. This will be available with only the 4 credit bureaus through whom you can avail. Also, you can avail your credit report from online financial markets monthly for free.
3) How does CIBIL track your credit and keep your score updated?
CIBIL timely monitors your payment towards credit card and loan, over the repayment tenure and based on your repayment trend, rate of availing credit, using different credit mixes i.e., secured and unsecured credit, sets your credit score. You can fetch your credit report easily through the official site of the CIBIL to understand your behaviour with credit. In case your behaviour with credit is apt, then your credit score will be on the higher end i.e., 750 and above. However, if your credit behaviour is poor, your credit score will be below 750.