Exactly what does credit monitoring do?

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Q. After all these data breaches, I’m finally going to get credit monitoring. But what does credit monitoring do?
— Looking for protection

A. It depends on the plan, as different credit monitoring services offer different features.

But generally, the service will notify you about changes to your credit report, usually within 24 hours of the change. This is important because it will tell you if something unexpected – which could be the start of identity theft – ends up on your report.

What kinds of activity would you be notified about?

You’d be alerted if any new accounts are opened in your name, or if a lender makes a hard inquiry – basically checking out your credit – if you’ve applied for a new loan.

It would also tell you if the address on your report has been changed, and some will tell you if a new public record, such as a property purchase, judgment or bankruptcy, has come up in your name.

If you’re concerned about identity theft because your personal information was exposed in a data breach or hack, consider putting a credit freeze on your credit report.

A freeze would basically lock down your credit report so if someone applies for a loan in your name, the lender would be unable to check your credit, and therefore wouldn’t approve the loan.

You can remove the freeze at any time in the future in case you decide to apply for new credit, so a freeze is probably the most effective way to protect yourself.

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This story was originally published Aug. 12, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.