What is Credit Monitoring? Are This Service Worth the Investment?

Whether you’re working on your credit score or worried about your financial information falling into the wrong hands, it’s worth keeping a close eye on your credit activity.

Identity theft is an ongoing problem in Canada. In fact, nine in ten Canadians (91%) expressed some level of concern about people using their online personal information to steal their identities. In a 2022-23 Federal Data Protection Commissioner’s survey, nearly half (47%) said they were very concerned about identity theft.

For Canadians who like to check their credit report from time to time, credit monitoring services can be a way to get extra peace of mind.

To determine if credit monitoring is right for you, you first need to learn more about providers, benefits, and costs.

What is credit monitoring?

Canadians can already get a free copy of their credit report and review it whenever they like. This is something everyone should do at least once a year.

If you pay for a credit monitoring service, you can automate this review process. You’ll receive alerts when new credit inquiries or accounts are added to your credit report, when your credit score changes, and even when your personal information changes.

How credit monitoring works

Credit monitoring can encourage prompt action if fraudulent activity is suspected by providing regular and timely notification of changes to your credit report. It can also be used to review your progress as you work to build or improve your credit score.

For example, your credit monitoring service will notify you if a lender places a “hard inquiry” on your credit report because a credit application has been made in your name. If you haven’t applied for a loan, this notification gives you the opportunity to promptly contact the lender and the credit reporting bureaus.

How much credit monitoring costs

In Canada, credit monitoring fees typically range from $10 to $24.95 per month for individuals and may start with a 30-day free or discounted trial, and can be purchased from the provider’s website.

Some banks and credit unions also offer credit monitoring services as an optional add-on subscription, or sometimes free to account holders.

Credit Monitoring Features

According to the 2023 TransUnion Global Survey, 43% of Canadian consumers said they use credit monitoring to learn how to manage their credit. 37% of Canadian consumers said credit monitoring gives them insight into changes to their credit report, and 30% said they use credit monitoring to detect fraudulent activity.

In addition to fraud alerts, subscription-based credit monitoring services typically allow you to check your credit report and score as often as you like.

Depending on the provider, credit monitoring may be offered along with services that search for compromised personal information on fraudulent websites, provide identity theft insurance coverage, lost wallet assistance, or identity recovery assistance.

What credit monitoring doesn’t do

Ultimately, credit monitoring only alerts you to new activity on your credit report. It doesn’t actually stop someone from committing fraud using your banking information, Social Security number, etc. And monitoring your credit alone won’t improve your credit score. Only using credit wisely and paying it off over the long term can do that.

Who should pay for credit monitoring?

Credit monitoring services can be a good option for people who are worried that their personal information (name, financial information, social security number) has been compromised in a data breach or their credit card has been lost or stolen. Continuous monitoring and notifications of new activity allow you to act quickly when you receive notice of unusual or unexpected changes.

Credit monitoring can also be useful if you are building a credit score or want to closely monitor your credit score in order to apply for a loan or credit card in the near future. Being able to see your progress in real time can be a great motivator.

Alternative Ways to Monitor Your Credit

If paid credit monitoring services aren’t right for you, there are other ways to monitor your credit activity.

• You can request a free copy of your credit report from the credit reporting agencies online or in person, by phone or mail. Equifax and TransUnion both offer free online access to your credit report.
• You can access free credit monitoring through fintech companies such as Borrowell and Credit Karma, but be aware that these providers may use your information to promote financial products to you.
• As part of your banking package, financial institutions may also give you free access to your credit score, provide you with monthly credit reports and notify you of any changes.
• You can also add identity alerts to your credit report. For Ontario and Manitoba residents, this means that lenders must call you before making a loan. For residents of other provinces or territories, lenders are encouraged to call you before making a loan to you.