What is Account Monitoring?

Once lenders make a yes decision, they might review your credit report on a regular basis as they continue to manage their financial risk. This automated process, called account monitoring, scans credit reports for certain risk characteristics as defined by the lender.

Some lenders, for example, monitor whether all of a consumer’s payments are on time. Others look at account balances in relation to the total credit limits. Some lenders review their accounts frequently. Others review accounts once a year.

Often, the benefits to you are easy to see. You’ll receive no notice in the mail that your credit limit has been increased, with out you having to ask.

Account monitoring also allows lenders to better manage the risk of extending credit. When they are successful, their losses are minimized, and they do not have to pass the cost of others’ bad debts on to you in the form of higher interest.

Myths and Realities:

Myth: Credit scoring is unfair to minorities.

Reality: Scoring models do not consider race, nationality, religion or other prohibited factors in a credit score and in fact would be prohibited by law from doing so. The Fair Credit Reporting Act (FCRA) and the Equal Credit Opportunity Act (ECOA) help insure that lenders rely on “likelihood of repayment” as their chief criterion when granting credit. Credit scoring is a bias free tool that enables lenders to better forecast an applicants’ likelihood of repayment and to do so fairly, for everyone.