Why 55% of Americans Monitor Their Credit — and 4 More Reasons Why You Should
Written by
Dawn Allcot
Edited by
T. Woods
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If you’re opening a new credit account, most people know it’s a good idea to monitor your credit in the months before you apply. The slightest mistake on your credit account, from an account by someone with a name similar to yours, to a payment logged as late that was on time, could reduce your credit score.
Fortunately, 55% of Americans know to check their credit before opening a new account, based on data from a new global TransUnion study. “Consumer credit monitoring has expanded considerably in awareness and usage over the past decade. This expansion has recently been fueled by the impact of the pandemic on consumer finances and the heightened familiarity among consumers of becoming victims of credit fraud,” said Charlie Wise, co-author of the study and head of global research and consulting at TransUnion.
Consumer education seems to be working, at least in the U.S. The survey showed that 86% of U.S. based consumers believe it’s at least “moderately important” to check your credit. Thirty percent said it’s extremely important. Of those polled, 58% said they monitor their credit monthly, 33% check weekly and 10% monitor their credit daily.
But you shouldn’t wait until you’re applying for a loan or credit card to keep tabs on your credit score. Checking your credit report regularly has significant benefits, the survey showed. Here’s why:
1. Keep Tabs on Changes to Your Credit File
Don’t wait until you’re ready to apply for a loan to look for errors or dramatic changes in your credit profile. Monitoring your report allows you to gain visibility to changes as they occur so you can take steps to correct errors or fix negative items on your report.
Forty-two percent of those polled monitor their credit for this reason. According to Wise, regular credit monitoring can help consumers gain approval to open new accounts, particularly for consumers who are underserved or new to credit.
“For new-to-credit and underserved consumers, who typically have a more difficult time expanding their credit wallets, credit monitoring can be a crucial enabler of greater credit education and access,” said Wise.
2. Learn How to Manage Your Credit Score
As the saying goes, you can’t improve what you don’t measure. Regularly monitoring your credit can help you boost it. Once you are aware of aspects like credit utilization ratio, which is the amount of credit you are using versus the amount you have available, you can take steps to improve your credit score. The survey showed that 41% of respondents monitor their credit to manage their score, while 32% signed up for credit monitoring services specifically for this purpose.
3. Detect Fraud
Many credit monitoring services include real-time fraud alerts, which can help you head off issues before they become a problem. Thirty-nine percent of people polled use credit monitoring to detect fraud.
4. Stay Motivated to Pay Down Debt
Seeing your credit score rise can offer motivation to pay down debt faster. Thirty percent of those polled monitor their credit to keep an eye on their overall balances, while 24% said keeping tabs on those balances has helped them pay down debt.
Eleven percent of those who use credit monitoring for credit management reduced their overall balances by an average of 11% after one year.
Bottom Line
“Our study measures the importance of credit education and quantifies the benefits that credit monitoring consumers experience,” Wise said in a TransUnion press release. “These benefits are shown to lead to better credit profiles, greater access to credit, or an improved ability to pay down debt, depending on the intent of consumers who monitor credit.”
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