Credit monitoring aids in early detection of identity theft, allowing you to quickly respond to suspicious changes in your credit. The rise of identity theft has also sparked interest in credit monitoring services. In reality, monitoring services only help you prevent identity theft after something out of the ordinary has happened with your credit file, e.g. a balance has risen unexpectedly or an inquiry has been placed on your report.
These services range from $50 to $180 a year depending on what's being monitored (your credit score vs. all three credit reports) and who's providing the report. Is the benefit worth the price tag?
A False Sense of Security
Signing up for a credit monitoring service doesn't completely protect you. When you sign up for a credit bureau's monitoring service, you'll only be alerted to changes in your credit report with that bureau. If an identity thief opens an account with a bank that doesn't report to that bureau, you may not find out until debt collectors start calling you.
Even 3-in-1 credit monitoring isn't foolproof because a thief can open accounts in your name that don't require credit checks and aren't reported to the credit bureaus.
You might not be notified if the thief uses your social security number with a different name. According to ConsumerReports.org, credit bureaus don't link together accounts with the same social security number and different names.
Delays in business reporting to the credit bureaus also delay the time you receive a fraud notification.
Should You Pay For Credit Monitoring?
In general, you don't need credit monitoring. You're better off putting that money toward your debt. Sure, it might only make a dent in your debt, but every little bit counts.
There may be some situations that you might spend the money for credit monitoring.
If you're going through a credit repair process, it can be cheaper to monitor your credit score through a service rather than ordering your credit score every month. Watching your credit score lets you know if what you're doing for your credit is actually helping.
A credit monitoring service can help you keep an eye on your credit after your social security number has been stolen and the thief is opening accounts in your name. Keep in mind, however, even in this situation, there may be less expensive and even free alternatives like freezing your credit report or putting a fraud alert on your credit report.
Don't Forget to Cancel Your Free Trial
Free trials for credit monitoring services are all over the place. In 2006, freecreditreport.com, a service offered by Experian, settled a lawsuit with the FTC after falsely advertising their services as free with no obligation and charging consumers' credit cards without notifying them in advance.
Even though the trial is marketed as free, you'll be asked to give your credit card number. If you don't cancel before the free period expires, your credit card number will be charged, often without notice.