A Personal Look at Credit Monitoring
Some people might say sixth grade is a little early to be teaching children about credit cards and credit scoring. I have to disagree. Some of my students are better money managers than my adult friends, and I feel responsible for keeping them that way. By teaching them about credit and finance early on, I'm doing them the biggest favor I can, giving them the tools they need to continue with successful money management into adulthood.
Last year, my class studied money management. I focused lessons on the basics of saving and borrowing. We spent an entire week on credit, credit cards and credit scoring. I felt I'd done a good job of impressing upon the students how much of an effect their credit score would have on their adult lives. It was time for me to share my personal story, which I felt could explain more than any lesson plan.
I began by telling the students that I had been a victim of identity theft five years before. Having spent all week learning about the importance of credit scoring, they were appalled to hear that the incident had lowered my score by almost a hundred points before I found out about it.
After giving them the whole story and assuring them that today my credit score was higher than ever, I introduced the subject of credit monitoring into our conversation. I explained that credit monitoring had more than one definition, and that when the time came for them to start opening credit accounts, they would have to decide if credit monitoring was important enough for them to undertake.
"Credit monitoring simply refers to keeping an eye on your credit score and the items on your credit report," I told them. "What makes the difference is who does that monitoring, how often credit is checked and from how many credit bureaus." I explained to the class that some consumers felt comfortable monitoring their own credit. They could do so for free by requesting a report from each of the three credit bureaus. Since everyone is entitled to one free report per year, one approach involved requesting one report every four months. "For instance, a person might get a report from Equifax in January, a report from TransUnion in May, and a report from Experian in September," I explained.
"Won't pulling your credit every four months bring your score down?" one student asked.
I assured him it would not, since it would be reported by the credit bureau as a "consumer pull" which doesn't affect the credit score.
"Other people," I continued, "don't feel comfortable waiting four months between credit pulls. They want to know about any changes or inaccuracies as soon as they happen. They have a choice, at that point, to begin paying the credit bureaus each time they request their credit report, or they can pay a credit monitoring service to do the monitoring for them. How many times they want to see their credit per year and from how many of the credit bureaus will determine what's the best idea for them."
"So some credit monitoring services only monitor your report from one credit bureau?" another student asked.
"That's right," I told him. "Those services are cheaper and some people are comfortable with that. If they're having only, say, their Equifax report monitored, they won't know about unauthorized pulls of their TransUnion or their Experian reports. They would know, however, if someone opened a fraudulent account under their name from one of those pulls, because the account would show up on all their reports including the monitored Equifax report."
The students took a few minutes to discuss the ideas I'd just introduced to them. I could see several of them already forming opinions on the importance of credit monitoring and the number of times per year they would want to know about their score and any changes to it.
"Other services," I said finally, "monitor your report from all three credit bureaus. They cost more, but you as the consumer can know as soon as any unauthorized pulls to your credit are made almost immediately after they happen. You can see that it's an individual choice for everyone to decide what level of monitoring is adequate for their peace of mind."
I tried to let the students finish the discussion on their own from that point. I didn't want to bias them with my own choices. It would be years before they would have to make these important decisions, but at least I felt they were one step ahead of where I had been at more than twice their age, when I first found out my identity had been compromised. As their teacher, that's the best I can do.