Your credit matters, and not staying on top of it can cost you more than money.
Having a credit score that needs work means that you might get offered higher interest rates when you borrow, which can end up costing you hundreds or thousands of dollars in interest, depending on how much you need to borrow. But beyond that, bad credit can also stand in your way if you're trying to rent a home, lease a car or even get a job. For all of these reasons, it's important to know what your credit looks like and make sure that picture is accurate.
That's where credit monitoring comes in.
In the past, credit monitoring was a luxury that consumers paid a premium for, but at Credit Karma we're happy to provide this service as part of your free membership.
When you enable monitoring, Credit Karma will keep you informed about important changes to your TransUnion credit report. You will receive notifications on your profile, as well as by email.
So, what do you need to look out for when you're watching your credit?
First, make sure that all the information currently listed on your profile is accurate. Then, keep an eye on your notifications to keep track of changes to your report.
Basically, you want to make sure that none of the monitoring notifications that you receive surprise you. You should especially be keeping an eye on the following:
- Hard Credit Inquiries: If you receive a new hard inquiry, it should mean that you have given your explicit permission for someone to run you credit. This could be a lender, landlord or employer, but they must always receive your permission. Hard inquiries are one of the first indicators of an application for credit, so it is important to follow up on unrecognized inquiries promptly. You can view your current hard inquiries on your full credit report.
- New Accounts: You should always keep an eye out for accounts that you do not recognize. However, if you have recently received a new card for an existing account, don't be alarmed if you get a new account notification. This can be triggered by the new card number you are assigned. It can also take some time for your lender to report new accounts to the credit bureaus. You may receive a new account notification over a month after receiving a new card, so don't worry about delays.
- Delinquent Accounts and Late Payments: Delinquent accounts and late payments can be damaging, so it's important to make sure they don't get listed in error. Even if you know that you were late on a payment, it's worth it to verify that your information is listed correctly when you receive the notification.
- Derogatory Marks: These can indicate a number of negative credit issues, such as a bankruptcy or an account in collection. Again, even if you're expecting one to show up, you should make sure that it's listed correctly when it does. You can read more about derogatory marks in our articles section and see your reported derogatory marks on your full credit report.
- Uncharacteristic Transactions: Monitoring your accounts for unfamiliar transactions can help you recognize suspicious activity, which may indicate identity theft, as soon as it happens. Use Credit Karma to keep on top of your transactions by connecting your accounts.
What if you find an error?
As soon as you see an inaccuracy on your credit report, it is important to act quickly. Sometimes inaccuracies can be due to a clerical error or mistaken identity, but other times they can be the result of identity theft. Either way, it is usually in your best interest to address inaccuracies on your credit as quickly as possible.
To correct errors on your report, you will need to contact TransUnion directly and file a formal dispute.
If someone was able to open an account in your name, they may still be able to misuse your identity, so if you believe that an error on your report may be fraudulent activity you may want to take some defensive measures.
Make Sure to Reap All the Benefits
By regularly watching your credit score and report activity, you will be able to maintain the accuracy of your information and make sure that you're being judged fairly by lenders. This isn't the only benefit, though. When you monitor your credit regularly, you have the opportunity to build a more comprehensive understanding of how credit works. There's no better way to learn about a complex system than by consistent observation, so take note of when your score changes and of recent activity that has taken place on your profile. Use your past observations to guide your future decisions and keep working your way to healthy credit.
About the Author: Laura Ross has been a Member Support Specialist at Credit Karma since December 2013. She can usually be found riding bikes around town late at night, communing with animals and eating sweets.
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