Credit has gained a new level of importance in this recession. All the sudden, even people with good credit scores are scrambling to get approved. Credit card companies are raising rates, HELOCs are being pulled, lenders are giving everyone the stink-eye: it's rough out there.
At least there is something you can do. It may feel like you have lost control of your investments and even your job security, but you can still stay on top of your credit profile. Here are just a couple reasons why it makes sense to monitor your credit:
- Identity Theft: Identity theft crimes seem to increase when the economy tanks. Don't let criminals use your Social Security number, credit card number, or insurance policies for their own gain. With email alerts through a credit monitoring program, you'll be the first to know if a new account is opened of if someone's applied for credit in your name.
- Credit Cards: Credit card companies are increasing interested rates, reducing credit limits, and even closing consumer accounts with very little notice these days. When you monitor your credit, you'll be able to see any changes with your credit card accounts as they appear on your credit reports instead of waiting for the disclosure notice to come in the mail.
- Damages: A financial hardship could damage your credit scores. If you lose your job, you might start making late payments on your debts. Or if you foreclose on your home, those negative records are going to show up on your credit reports. You can use credit monitoring to to track how these changes impact your credit.
- Tightening your Belt: Many of us are looking for ways to cut our expenses right now. Your home and auto insurance policies are a good place to start. Most insurance companies will use your credit scores to set your premiums, so it makes sense to see where your credit stands before you shop for a cheaper policy. Utilities, cell phones, cable TV, and landlords may also use your credit to set your rates.
- Loans: Eventually, this real estate market is going to bottom out or you'll be in the market for a new card and you'll want to use your credit scores to get a loan. If your scores are less than perfect, you should start working on them now. It may take a couple years of good behavior to break the 700 mark. You can use credit monitoring to track improvements in your scores over time.
Emily Peters – Credit.com's personal finance expert and former TransUnion credit bureau insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.