The 5 best credit monitoring apps of 2021, according to experts

Continuously monitoring your credit now can save you a lot of headaches in the future, especially if you’re suddenly plagued by fraudulent abuses of your personal information. In 2020, the Federal Trade Commission received more than 1.4 million reports of identity theft in the U.S., double the previous year, with the top three reports listed as credit card fraud, government documents or benefits fraud and loan or lease fraud.

While credit monitoring services don’t prevent fraud from showing up on your credit report or affecting your credit score, experts say they can help detect major changes to inform necessary action. But credit monitoring sites and apps vary when it comes to cost and services — understanding what they do and what’s best for you are important before investing in a specific plan. To figure out the best approach to finding the best credit monitoring apps, we consulted financial experts.

Credit score and credit report are similar terms with major differences.

A credit report is a detailed compilation of information from your financial history, including the number of accounts you have open, outstanding balances on each account, public records and credit inquiries. In the U.S., there are three major national credit bureaus in charge of supplying this information to governments and lenders — Experian, TransUnion and Equifax.

“Having a healthy credit report is especially important if you have plans to make a major purchase like a car or mortgage” or plan to “apply for a new job as some employers check your credit report,” said Colleen McCreary, chief people officer and financial advocate at Credit Karma.

To maintain your financial health, Rod Griffin, the senior director of consumer education and advocacy at Experian, added that you should generally “begin monitoring your credit at least three months before applying for a mortgage or any large purchase.”

A 2020 study showed that complaints about credit reporting to the Consumer Financial Protection Bureau increased by more than 50 percent since 2019 and accounted for over 60 percent of all complaints submitted in 2020, with most complaints cited as “incorrect information on your report.” These errors “can be really devastating if you don’t address them over time,” said Shang Saavedra, a personal finance expert and money coach who runs the blog Save My Cents. She said it’s “good to remain educated on your financial situation” and track changes to both your credit score and report. That way, any issues or errors “don’t become even bigger problems down the road,” especially when you’re hoping to buy a house, a car or other substantial purchases.

A credit score is essentially like a numerical grade given based on details in your credit report that allows lenders to determine your credit worthiness (and in turn your interest rate). Lenders like credit card companies will pay scoring companies like VantageScore and the Fair Isaac Corporation (FICO) — the most widely used company by lenders, according to the company’s website — to create a credit score representing your financial situation, ranging from 300 up to 850. It’s based on different categories, from payment history to the amount owed and provides a certain amount of weight to the score. VantageScore and FICO have slightly different scoring criteria, so scores will likely vary between both companies.

Credit monitoring services scan data about you collected by credit bureaus and your credit history, including public records and account openings, notifying you of any activity and changes to your credit report.

“Rather than having to constantly check new reports for new information, you can let that information come to you with credit monitoring,” said David Blumberg, the senior director of public relations at TransUnion. He noted that some services also help you protect and…