ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / ECONOMY & WORK

Consumer Credit Monitoring Surges As Americans Prioritize Financial Well-Being

Financial institutions adapt to consumer expectations, prompting rise in demand for credit monitoring services
PUBLISHED MAR 4, 2024
Cover Image Source: Pexels | Photo by Karolina Grabowska
Cover Image Source: Pexels | Photo by Karolina Grabowska

More and more consumers today are becoming aware of their credit ratings. According to Charlie Wise, a senior vice president at TransUnion, over 100 million Americans signed up for one of the company's credit monitoring programs between 2018 and 2023. "Consumer credit monitoring has expanded considerably in awareness and usage over the past decade. This expansion has recently been fueled by the impact of the pandemic on consumer finances and the heightened familiarity among consumers of becoming victims of credit fraud," he says.

Credit and debit cards | Getty Images | Photo by Matt Cardy
Image Source: Credit and debit cards | Getty Images | Photo by Matt Cardy

Since the onset of the COVID-19 pandemic in 2020, there has been a significant decrease in overall consumer debt levels. Lockdown measures curtailed spending on non-essential goods and services, while stimulus payments provided individuals with additional resources to pay down their existing debts. Additionally, some borrowers took advantage of forbearance programs for student loans and mortgages, further reducing their financial obligations.

However, as these temporary financial cushions depleted and inflationary pressures drove up prices, many individuals are once again resorting to taking out loans to meet their financial needs. Consequently, there has been a noticeable uptick in the number of credit offers being extended to consumers.

Pay Debt Note | Unsplash | Photo by Towfiqu barbhuiya
Image Source: Unsplash | Photo by Towfiqu Barbhuiya

Wise notes a heightened interest among individuals in understanding and managing their credit ratings. The availability of online resources such as NerdWallet and Credit Karma, along with complimentary credit monitoring services offered by some banks, has facilitated greater consumer awareness and engagement with their credit profiles.

"These benefits are shown to lead to better credit profiles, greater access to credit, or an improved ability to pay down debt, depending on the intent of consumers who monitor credit," he adds.

Pexels | Karolina Grabowska
Image Source: Pexels | Photo by Karolina Grabowska

Despite the increase in borrowing activity, most individuals maintain strong credit ratings. According to data from the Federal Reserve Bank of New York, total credit card balances rose to $1.13 trillion in the fourth quarter of 2023, yet the average FICO score remains above 700. FICO considers a score between 670 and 739 to be indicative of good creditworthiness.

Matthew Toles, a banking industry expert, emphasizes the significance of managing revolving debt, such as credit card balances, which has a considerable impact on credit scores.

"Key factors influencing credit scores include the utilization of available credit, payment history, and the length of one's credit history. While there are strategies to improve credit scores, meaningful improvements may take several months to materialize," he remarks.

An air traveller uses a credit card to pay for items at a John F. Kennedy International Airport | Getty Images | Photo by Robert Nickelsberg
Image Source: An air traveler uses a credit card for payment | Getty Images | Photo by Robert Nickelsberg

Utilizing more than 30% of available credit, such as maintaining a balance of $8,000 on a credit card with a $10,000 limit, can adversely impact your credit score. Consistently making at least the minimum payment each month is also important to avoid negative repercussions. Furthermore, missing even a few payments can significantly lower your credit score.

Another factor to consider is the timing and frequency of credit card applications, as applying for multiple cards simultaneously can harm your credit score, regardless of whether you open new accounts. Individuals with limited or no credit history may worry about their eligibility for new credit; however, according to Toles, this concern may not always be warranted.

Image Source: Peter Dezeley/Getty Images
Image Source: Photo by Peter Dezeley | Getty Images

To improve your credit score, several strategies can be employed. One approach is obtaining a secured credit card, where you deposit funds into an account to establish a credit line. Alternatively, becoming an authorized user on a family member's account can leverage their positive payment history to benefit your credit report.

"It’s a clear indication that those consumers who are actively looking to improve their credit health may achieve better results if they monitor their credit and are able to plan their steps and track their progress," says Lindsey Downing, head of TransUnion’s Consumer Interactive business. 

Today, consumers have come to anticipate financial institutions providing complimentary credit monitoring services. This offering empowers individuals to enhance their credit profiles, effectively manage current credit accounts, and explore opportunities for obtaining new credit down the line.

MORE ON MARKET REALIST
She was already emotional even before her husband even played the Bonus Round.
10 hours ago
Fans on social media were livid and they did not shy away from expressing their disappointment.
12 hours ago
Matt quoted $18,000 for 'Anne of Green Gables' but merely paid $25 while buying it.
13 hours ago
Carl L. Shy, an Olympian and basketball player, later joined the LAPD and retired as a detective.
14 hours ago
The young contestant was not given the win for a minor spelling error, which proved costly.
15 hours ago
The guest said that she doesn't even let her children play with the toys to preserve them.
1 day ago
The item might have been worth more, but no one had any idea of how much it could sell for.
2 days ago
Mr. Wonderful did not hold anything back as he even called the entrepreneurs bad at marketing.
2 days ago
The player couldn't believe that she had aced the "Grand Game" of the show.
2 days ago
Cuban beat offers from Lori Greiner and Kevin O'Leary to add the company to his portfolio.
2 days ago
Rick Harrison wanted to pay less than a thousand bucks at first, but the guest was a tough negotiator.
3 days ago
The contestant had a good start to the game but things did not end all that well.
3 days ago
The guest inherited the jewels from her mother and then found out that they were Cartier products.
3 days ago
The host Pat Sajak was seen standing with a broom while the contestant was celebrating.
4 days ago
The contestant wasn't able to match the excitement with his performance.
4 days ago
The guest said that there was so much more that she hadn't even brought to the show.
4 days ago
This wasn't the first time that an appraisal by an expert worked in favor of the seller.
4 days ago
The contestant seemed to be going through the emotions even before the results were revealed.
4 days ago
As per the guest, even her father had no idea where the piece of jewelry came from.
5 days ago
The contestant was supposed to name a deceased artist who they'd like to see perform as a hologram.
5 days ago