Why should I monitor my credit report?

There are three key ways to monitor your credit report.  One is to obtain your one free credit report annually from each of the three credit reporting agencies – Equifax, Experian and TransUnion. The second is to purchase your credit report and/or score one-time only from many different companies. The third is to sign up for ongoing monitoring on a subscription basis, which monitors your account for daily changes.  The selection you make depends upon your purpose – curiosity, review for identity theft, check for errors, check the status of your credit before applying for credit, maintain your good credit, or improve your credit. This service is offered for free by some companies and other charge for it.

Your reason will determine what you do and how often you do it.

Annual review

If you are just curious about your credit report and want to check for any unauthorized account openings or errors, you will want to get you free credit report from the three credit bureaus.  Since you get one free from each bureau annually, you could get one from each every four months.

If you plan to apply for a mortgage, auto loan, or credit card soon, I suggest that you order your free report from all three credit reporting agencies at the same time. You don’t know which credit reporting agency the lender uses you will want to request if from all three.  The only lenders that use all three are mortgage lenders.  If there are errors, you want to have time to clear them, prior to applying.

You can order you free credit report from www.annualcreditreport.com.  This is the only official free site; others have similar names so be careful.

If you find an error, you will need to contact the credit bureau to get the errors corrected.  If you think you are a victim of identity theft, you need to contact the credit bureau, credit issuer and police.

Also, read >  CFPB Launches Database for Credit Report Complaints

Ongoing monitoring

If you are working on improving your credit to apply for credit in the future, verifying that errors have been corrected or removed, checking for fraud, or making sure you maintain your excellent credit, you may want to sign up for an ongoing monitoring service.  Ongoing monitoring helps you gauge your progress toward improving your score and to review for errors and/or fraud. For example, you can select alerts for changes in your credit card balances and which accounts were opened recently.

Many companies offer credit monitoring and most offer credit scores along with monitoring.  The scores can be FICO scores, Vantage scores, and scores sold only to consumers to gauge their credit. Some companies offer it for a fee or free. The service is not free from the three credit reporting agencies or FICO, and FICO scores aren’t free.  Scores developed for consumer use only and not sold to lenders are offered for free by some companies. You can shop around for the company that fits your criteria.  Even though these scores aren’t used by lenders, they can still be used to determine if your credit is excellent, good, average or poor.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.