Credit Monitoring

Publication Date :

07 Jun, 2025

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Table of Contents

What Is Credit Monitoring?

Credit Monitoring is a service that facilitates tracking of credit applications or transactions and sending alerts to customers, who can check if anything is suspicious for appropriate steps to be taken further. The sole purpose here is to ensure protection against any potential theft (or fraud) and also to have a watchful eye on activities affecting customers’ credit scores, thereby enabling individuals to check their scores and retrieve accurate results for their credit inquiries.

In general, many credit card companies provide credit monitoring services for security and theft concerns. It allows them to track borrower's financial data and immediately notify them of any patterns signaling suspicious activity. Also, a sense of security resides within consumers as they know that credit cards and activities are being monitored on their behalf for error detection.

Key Takeaways

Credit monitoring is a service enabled by banks or credit card companies to track and monitor credit card transactions. It helps detect fraud and suspicious activity in an account.
It also assists in identifying the changes in credit scores and helps consumers improve them. They receive alerts (via phone or email) if the card is used unfairly.
Companies continuously monitor such transactions and detect any pattern indicating potential identity theft early. In contrast, consumers can also plan and pay down their debt easily.
It differs from credit freeze as it only reports and alerts consumers.

Credit Monitoring Explained

Credit monitoring services allow customers to get alerts from time to time whenever a new credit transaction occurs or an application is sent to the financial institutions. When these alerts are generated, customers are aware of any fraudulent activities that might be conducted on their name. In addition, this monitoring process also enables credit card providers to watch the borrowing behavior of individuals and detect anomalies, if any. Also, changes in creditworthiness can be determined with these services.

For instance, if a person's credit card is showing large purchases, it can indicate that the credit card is stolen, and the fraudster might be exploiting the card for their benefit. In such scenarios, the credit monitoring companies can send an alert to customers regarding their credit purchases, thereby making them take necessary steps to block the card. Moreover, borrowers can also utilize these services to check, analyze, and improve their credit scores.

The entire process of publishing the credit monitoring report is divided into four stages. It initiates with the continuous monitoring of the credit transactions made by the credit card holder. These companies watch for transactions by taking credit reports from credit lenders for any noticeable changes. In this process, if they find or detect any uneven patterns, customers get alerts regarding them. Furthermore, this early detection helps both the parties (creditor and borrower) to identify any potential theft in the name of identity theft or fraud. These alerts can either be sent through text or email.

Moreover, when a business intends to take a loan or sanction funds, the credit monitoring arrangement (CMA) must be presented to the lender. It provides a summary of the entire business operations and financial statements (historical as well as projections) to them. Later, the lender can decide how much (limit) to sanction the loan and on what terms.

Examples

Let us look at some examples of how credit monitoring companies use this feature to analyze borrower's credit limits:

Example #1

Suppose John bought a credit card from ViceCredit a year ago. Throughout this period, he maintained a good credit history through timely payments. Epilex is a credit monitoring company that has been tracking the transactions and applications that John used to make from time to time. As a result, he was able to get all alerts as and when an activity was carried out.

However, suddenly, some frequent purchases began to happen using his ViceCredit card. Epilex instantly generated a notification for John. As soon as he checked the message, he searched for his credit card in the wallet, which he found missing. He realized that some unknown person was making due purchases from his card. Hence, he blocked the card and filed a complaint against the crime.

Example #2

According to news published in 2024, TransUnion surveyed consumers from different nations to identify the reasons why they prefer having a credit monitoring service to keep a check on their credit activities. The report stated how a number of people from all across the globe were using it just for the sake of doing so as it comes for free. While a large number of users did it to ensure fraud detection, many used it for credit score improvement, indicating the usefulness of these services.

Benefits

Credit monitoring is of vital importance to the credit industry in understanding the purchasing behavior of consumers. It helps in identifying any underlying theft happening in an account or retrieving credit information per their requirements. However, there are other benefits of having these services as well. Let us look at them:

Helps in fraud detection: The foremost reason for buying these services is that it helps in identifying any fraudulent activity residing in a credit card account. Due to continuous monitoring and tracking, transactions are always under the surveillance of credit monitoring companies. A 2023 report by Experian also reported that 60% of credit card holders experience some sort of fraud, while another report claims that 39% of the holders successfully combated fraud with these services in the US.
Getting better credit offers: Additionally, with a credit monitoring arrangement, customers can have a low APR (Annual Percentage Rate). More offers and rewards, including free monitoring services, can be enabled for customers.
Gain visibility to changes on the credit report: These services also help consumers with transactions and changes in spending patterns during a particular period. Any anonymous activity will directly alert customers, who can then lock or freeze their accounts.
Learn how to manage and monitor credit scores: Consumers can learn to manage their credit limits and spending habits and monitor credit scores. Also, these companies alert customers on their changing credit scores so that the latter can plan.
Pay down debt and make regular payments: Since the alerts signify credit scores, consumers can decide when to pay down debt and manage finances likewise. You can plan the repayment structure to improve your credit score further.

Credit Monitoring vs Credit Freeze

The following pointers explain the difference between credit monitoring and credit freeze in brief:

Basis	Credit Monitoring	Credit Freeze
1. Meaning	It is a service that tracks and monitors credit card transactions and sends alerts to consumers.	It is a free way to protect oneself from identity theft.
2. Effectiveness	This service can only detect fraudulent transactions in the early stages.	Here, consumers can directly block their cards and restrict access to their credit facility.
3. Cost	Mostly, it is a free-of-cost service provided by credit card companies or banks.	For lifting and freezing the account, there is no fee involved.
4. Impact on credit score	There is no direct impact but it does inform (alert) consumers on their credit scores.	A credit freeze facility does not impact borrower's credit scores.