Credit Monitoring

You will feel financially empowered when you see yourself on top of a good credit score range. To ensure this feeling lingers, regular Credit Monitoring is essential. Credit Monitoring gives information to banks/individuals about any change in financial behavior to keep protected from frauds and to maintain financial health.

Credit Risk Monitoring

A good credit score range is essential to convince financial institutions about your financial health and repayment capacity. CIBIL keeps a record of all your financial activities, including repayment behaviour, in the form of a Credit Report. Credit Score calculation is done on the basis of the information in the Credit Report. Any change in the credit report will impact the credit score. Credit Monitoring services will provide you with constant information about changes in your credit report so that you can identify any fraudulent transaction and get it resolved before it gets worse.

What is Credit Monitoring?

Credit Rating in India is done by CIBIL and other Credit Rating Agencies like Equifax, Experian, and CRIF. The most popular among them is CIBIL, as it is the first rating agency in India. CIBIL maintains a record of the credit history of individuals as well as Companies. Any change in the credit behaviour of an individual or Company will be recorded in the Credit Report.

Credit Monitoring enables checking the report for accuracy of the information and also to detect any fraudulent transactions that have occurred as well as any discrepancy like duplication of loan accounts, ownership issues and change in personal details. All these aspects can have a negative effect on your credit score.

Identity theft is one of the grave issues in recent times with mounting frauds. You need Credit Monitoring services that screen large volumes of databases round the clock to trace any misuse of personal identity. If you engage in credit monitoring services, you will get regular notification of changes in your credit report vide email or SMS. If the transactions have not been initiated by you, then you can immediately seek resolution from the respective financial institution. A stitch in time always works to avoid major financial loss as well as a dip in the credit score.

If you hire credit monitoring services, then you will have to pay a fee. Some of the credit monitoring services do a thorough tracking of credit scores and enable the customers to maintain good credit quality.

A fraudulent transaction, if not detected well in time, can complicate issues that may not be resolved easily. It is highly important to be constantly informed about any changes in the credit report if you want to maintain a good score and get access to larger loans like home loans.

You can do the Credit Monitoring for free by drawing a CIBIL Report online on a regular basis. You can check for any of the following changes in the Credit Report regularly to avoid any mishap that would hurt your credit score.

  • Change in name
  • Inclusion of any new loans
  • Fraudulent transactions by stealing your personal and credit card identity
  • Duplication of loan accounts
  • Addition of new loan accounts that you have not initiated.
  • Enquiries not done by you

If you spot the discrepancy well in time, you can report to the concerned authority for corrective measures before further damage is done.

Credit Monitoring is a great tool even for banks/financial institutions to keep a close watch on the financial activities of their borrowers. Though banks/financial institutions exercise great caution while assessing a loan application, they still carry the responsibility of maintaining the asset quality and recovery of the loan. They will have to monitor the borrower’s account from many perspectives.

Banks and other financial institutions resort to  Credit Risk Monitoring in order to maintain the quality of assets and ensure recovery of the loan within the stipulated time. Periodical Credit Monitoring in Banks will help them to keep track of any changes in the financial behaviour of the borrower that could lead to future recovery issues. They will get to know if the borrower has availed of any fresh loans that can impact the repayment capacity and will get warning signals about potential defaults.

Also Check - Cibil score by pan card

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Benefits of Credit Monitoring

Credit Report is collective information about your financial activities, i.e., number of loans availed, repayment behaviour, number of enquiries made, utilisation of credit card limit, etc. Your credit score depends on the information provided in the Credit Report. Any change in the Credit Report can either make or mar your credit score.

Credit Monitoring is one such service that gives keeps you notified about any changes in your Credit Report that could impact your Credit Score. Even a decrease in the Credit Score by a few points can hinder your chances for approval of easy loans like Personal loans. The required CIBIL Score for a Personal Loan is 750. Since financial institutions rely on CIBIL Score to quantify your financial health and creditworthiness, it is imperative to have the required CIBIL Score to get easy approval on better terms. The various benefits derived from Credit Monitoring are  

  • Helps you plan your finances: Keeps you informed about the Credit Score changes so that you can plan your expenditure and loan repayments better to maintain a good score.
  • Averts identity theft: This is one area that, if not monitored, can go undetected and cause damage to your financial health and have a negative effect on the Credit Score.

Timely detection of identity theft will enable you to take immediate action by opting for freezing of your accounts or credit cards, depending on the nature of the suspicious activity. 

  • Provides option for customised alerts: If you have been a victim of credit card fraud, you can opt for notifications regarding transactions on your credit card that are suspicious in nature.
  • Helps you spot discrepancies: With regular information about a new loan, accounts added, enquiries made using your identity, etc., you will be able to verify the accuracy of the transactions and report for corrective action.

Additional Reading: How to get loan for low cibil score?

How does Credit Monitoring work?

Are you constantly worried about the theft of your personal identity like name, address, date of birth, PAN No., etc. Your fear is justified considering the mounting instances of fraud. Fraudsters can use the stolen personal identity to open loan accounts or avail of credit card facilities in your name. They can also gain access to your bank account and credit card details to conduct illegal financial transactions online. You can get protection from these threats with the help of Credit Monitoring services. 

Credit Monitoring basically helps in identifying any transactions like the addition of a loan that you are not aware of, transactions on your credit card that you do not remember or enquiries that you have not made. If you can point the finger at any of such transactions, you can immediately report to the concerned financial institutions which have opened the account and issued the credit card about the identity theft for corrective measures. 

Credit Monitoring can either be done by engaging the services of Credit Monitoring Agencies, or you can do it yourself by regular checking of CIBIL Report online. Credit Monitoring Services will screen millions of databases 24x7 to trace any addition to your financial activity or theft of personal identity. You will get immediate notification of such activities through emails and SMS. This will help you to understand the reasons for the change in the Credit Score and apply corrective measures.

Credit Risk Monitoring is equally important to financial institutions as it will help timely identification of potentially high-risk borrowers and avert any financial loss to the institution due to loan default.

Additional Reading: What is minimum credit score?

Limitations of Credit Monitoring

Credit Monitoring Services is a great boon for the upkeep of financial health by providing warning signals about suspicious transactions and also by notifying the clients about wavering financial discipline.

But there are certain limitations to what Credit Monitoring Services can do.

  • Credit Monitoring can only give signals of potential fraud but cannot avert it by itself.
  • Data breaches, credit card frauds, the opening of fake accounts, etc., can only be identified after it is done but cannot be prevented before the occurrence.

There is an amount of individual responsibility involved to prevent identity theft and fraud besides resorting to Credit Monitoring.

  • Safekeeping of sensitive information like bank account and credit card details, internet banking and credit card credentials, OTPs, etc
  • You should never give access to your passwords to anyone.
  • Should always opt for dual authentication for online transactions.
  • Get your Credit Card hotlisted immediately if it is stolen.

Additional Reading: What is Experian cibil score?

Impacts of Credit Monitoring on Credit Score

Regular checking of CIBIL Score by drawing a CIBIL Report online is the one and the only prescription for the concern- how to improve my CIBIL Score, which amounts to Credit Monitoring. The next concern will be does Credit Monitoring have an impact on the Credit Score.

No, Credit Monitoring involves soft credit enquiry of Credit Score and will not impact your cibil score. Instead, it will help you in identifying inaccuracies of any form like fraudulent transactions, personal identity theft, and other discrepancies like change in personal identity, duplication of accounts, etc.; timely identification will help you in getting the issues resolved before it is too late.

However, if you are applying for any kind of loan, the lender will generate a credit report which will amount to a hard inquiry. Every hard inquiry will be recorded in the Credit Report and will have a negative impact on the Credit Score.

Additional Reading: What is Equifax credit score?

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FAQs

✅How quickly can a credit report be available for an individual?

You can access your CIBIL Report online on the official website of CIBIL. You can generate the CIBIL Report by PAN Card by giving other required personal details like name, contact address, email address and mobile number. The report will appear immediately on the screen, and you can download the same if you need a hard copy.

✅What does credit monitoring include?

Credit Monitoring includes

  • Providing information about the theft of personal identity can be one of the major reasons for the decline in your Credit Score.
  • Information about suspicious activities using the stolen personal identity. It will include fraudulent transactions using your bank account and credit card details.
  • Customised information. You can choose for fraudulent credit card usage alerts or for frequent alerts about your credit score change, etc.

Proper use of Credit Monitoring will help in inculcating financial discipline with better financial planning. This will help you maintain good financial health and gain easy access to credit facilities.

✅What is the three credit monitoring?

The Three Bureau Credit Monitoring Service gives you alerts in respect of any changes in the Credit Report of all the three Credit Bureaus, that is, TransUnion CIBIL, Equifax and Experian.

✅What does a credit monitoring alert mean?

A Credit Monitoring alert means any information regarding changes in your Credit Report. It could be information regarding the following

  • Suspicious Transactions as a result of identity theft.
  • Addition of any new loan account or credit card issued 
  • Change in your Credit Score.

A routine credit monitoring is essential for good financial health and the prevention of fraud.

✅What is loan monitoring?

Despite due diligence and assessment of the financial health and repayment capacity of the borrower at the time of sanction, there are chances of a loan going bad due to various reasons like deterioration in the income level of the borrower, increase in debt obligations subsequently, etc. 

Loan monitoring or Credit Risk Monitoring is a post-sanction ordeal that every financial institution engages in, in order to protect the investment. Identification of red flags that indicates the deterioration in the financial soundness of the borrower that would lead to non-repayment of debts is highly essential in order to maintain the quality of the asset.

✅Is Credit Monitoring essential to perform

It is essential to perform Credit Monitoring to be aware of any change in your Credit Score so that you can plan your finances well and keep a check on your expenses. It is also important for the timely detection of discrepancies and frauds in order to take corrective measures before it is too late.

✅How can I improve my credit monitoring?

You can improve your credit monitoring by engaging in Credit Monitoring Services and getting regular notifications about any changes in the Credit Report.

✅What is a free credit monitoring service?

You get free credit monitoring service by accessing sites that provide you with a free credit score and credit report. You can access this site periodically, at least once a year, to know about your credit score status and any changes in the credit report.

It is advised to go for free credit monitoring service at least three months before you plan big-ticket loans like home loans or vehicle loans. The minimum CIBIL Score for home loan will be 650, and above, the CIBIL Score for personal loan will be 750, and CIBIL Score for a vehicle loan will be 700 and above.