How to Choose a Credit Monitoring Service

Question: what do banks and lenders use as their primary tool to decide if you're a good lending credit risk or not?

Answer? Your credit score.

Hey, banks aren't crazy (money hungry, yes, but not crazy). They know enough to protect their financial interest by evaluating whether you're a good bet to pay back your loan or pay that credit card bill on a regular basis.

Unfortunately, if you have a FICO credit score of 650 or lower (or worse, 600 or lower), then your chances of getting that loan or that credit card are about the same as the Cubs winning the World Series next year.

What steps can you take to minimize a lousy score, and maximize your chances of getting a "green light" on your credit application?

For starters, investing in a solid credit monitoring service is a good idea.

What's a credit monitoring service? By and large, it's a company that keeps track of your online credit report and credit scores for you, and alerts you when news, both good and bad, pops up. Credit monitoring services can also give you a heads-up on errors and typos in your credit report, so you can get a head start on fixing the problem before a lender sees the mistake and denies you credit.

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It's not just about credit scores, either. A good credit monitoring service can be your best defense against identity theft, too. With the number of identity theft crime victims exceeding 11 million in 2009, (according to a study by Javelin Research, a credit monitoring tool can keep you safe by alerting you to "surprise" transactions on your credit card or even notify you of an online credit check. Simply put, a credit monitoring service not only gives you credit protection, but peace of mind as well.

Let's look at the key steps needed to get your credit monitoring service up and running:

Do you need a credit monitoring service? While you definitely need to monitor your credit, a fair question to ask is if you need to pay someone else to handle the job for you. Perhaps the best way to answer that question is list what credit monitoring services do, and then figure out if you have the time and inclination to "check off" that list by yourself.

What credit monitoring services do:

• Check your credit score for unusual activity – and alert you if a breach happens.
• Check those activities monthly, weekly, or even daily.
• Provide copies of your credit reports on a regular basis.
• Offer you fraud resolution services and fraud insurance packages.

All of the above tasks, of course, can be handled by yourself – if you have the time to track it all down. While it is easy to get your own free credit report (you can get one free, with no strings attached, once a year at www.annualcreditreport.com), monitoring your credit activity and fighting fraud may be too much on your plate. If that's the case, a credit monitoring service is well worth looking into.

Above all, make sure your credit monitoring service does a thorough job – if you decide to go forward with a credit monitoring service, make sure it covers the following ground:

Tracks all three major credit reporting agencies – While most credit monitoring services claim they can give you access to all three major reports (from Experian, Transunion, and Equifax), few actually do. Aim for a company than can give you access to your credit reports from all three bureaus, with email alerts on a 24-hour basis.

Doesn't cost you an arm and a leg – A good credit monitoring service shouldn't cost more than $160 per year (or about $10-to-$15 per month). Anything more and you're probably being over charged – or worse, paying for something you don't need. Credit Manager, from Experian, for example, only costs $11.95 per month. And Credit Watch from Equifax costs $14.95 per month, but includes $20,000 in I.D. theft insurance.

Offers complete customer service – If something happens on your credit report that seems suspicious, you'll want to get as much information as possible, as quickly as possible. To that end, you'll want a credit monitoring service with 24-hour telephone support and real-time email response (texting, too, if you can swing it). Time really is money, so if something goes awry, you'll want a credit monitoring service that's responsive on the fly.

Choosing a good credit monitoring service isn't rocket science – it's all about common sense. Follow the tips above, and get the credit monitoring help you need –and deserve.