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While our content is based on our extensive knowledge and experience of the credit card industry, this information is intended for general educational purposes and should not be relied upon as the sole basis for managing your finances.

Please let us know if you have any questions or suggestions.
 

Credit Monitoring

What is credit monitoring?
Credit-monitoring services track your credit file every day and alert you whenever there is a change. Occasionally, they will also tell you your most recent credit score. Credit-monitoring services offer two primary benefits.

The first (and most important) benefit offered by credit-monitoring services is that they help you prevent identity theft. Identity thieves operate by opening credit accounts under other people's names. Identity theft occurs when someone uses your personally identifying information, like your name, Social Security number, or credit card number, without your permission, to commit fraud or other crimes. More information about identity theft can be found at the Federal Trade Commission Web site.

When an identity thief tries to open a new credit account under your name, a credit inquiry will be posted to at least one of the three main credit bureaus. Credit-monitoring services alert you within 24 hours of any change to your credit report, including these credit inquiries. The sooner you can be told about the potential identity-theft transaction, the faster you can follow up with your credit monitoring service provider or the lending company to stop the identity theft before any actual damage is done to your credit. It can be very difficult to prove that your identity was stolen, and if you can't prove it, then you will be responsible for paying off the loan even though you didn't use any of the money. The results of this can be devastating to your credit, as well as your personal income.

The secondary benefit of credit-monitoring services is that they stay on top of your credit score. This means that you will always know your credit standing, which is important if you want to apply for a new credit card, loan, or other credit account.

Which Credit-Monitoring Service Should You Choose?
There are many different versions of credit monitoring. Be aware that every company tries to persuade you that their service is much better and different than anything else out there.

The reality is that all of them are very similar and offer the same types of popular features. The most common features include:

  • Number of bureaus that they monitor: There are three main credit bureaus in the United States: Equifax, Experian, and TransUnion. Some services will monitor one of them and others will monitor all three.
  • Provide you with your credit score: Again, each credit bureau has its own way of scoring your credit. Different services provide you with a different amount of credit scores at different times of the year.
  • Identity Theft Insurance: Amount of coverage for expenses related to recovering from an identity theft event. Usually they have a deductible.

The bottom line is that credit monitoring is something that everyone should have -- mainly because of the hassle involved if you become a victim of identity theft. At the same time, the risk of becoming an identity-theft victim is fairly low (below 5%), and thus, if you do not want to spend the money to protect yourself against that risk here are a few tips from the FTC that you can do yourself, for free:

  • Protect your Social Security Number (SSN). Don't carry your Social Security card in your wallet, and ask to substitute another number for your driver's license number (if your state generally uses your SSN as a default driver's license number). Substitute another number for your SSN as you health insurance policy number.
  • Treat your mail and paper garbage carefully.
    • Shred personally identifying documents if you no longer need them. According to the Good Housekeeping magazine, 40% of all identity thieves get personal information from people's mail and other papers.
    • Mail your personally identifying mail in post office collection boxes or take it to the post office.
    • Stop your mail if you're going to be on vacation or away from your mailbox for an extended period of time.
    • Also, you can limit the number of pre-approved/prescreened credit offers you get in the mail by calling: 1-888-5-OPT-OUT (1-888-567-8688). Note: You will be asked to provide your Social Security number, which the consumer reporting companies need to match you with your file.
  • Password-protect your credit card, bank, and phone accounts with generic strings of numbers and letters, rather than using your birthdate, mother's maiden name, and the last four numbers of your Social Security Number.
  • Verify a source before sharing information: Don't give out personal information on the phone or through the mail or Internet unless you are CERTAIN you know who you're dealing with.
  • Safeguard your purse and wallet, and if you store information at home or work, keep it in a secure, preferably locked, place.

More tips on how to avoid identity theft are available from the FTC.

If you are interested in signing up for a credit-monitoring service, take these guidelines into account:

  • If your credit score is Excellent (above 700), then you should only care about a credit monitoring service that provides you an alert whenever there is a change to any of the 3 credit bureaus. Nothing else!
    You should not care about credit scores, ID theft insurance, or anything else they might try to sell you on.
    Our recommendation: Credit Bureau Monitoring for $4.99 per month -- this is the least expensive service we could find that met our criteria.
  • If your credit score is less than Excellent (below 700), then you should choose a credit-monitoring service that provides you with both 1) an alert whenever there is a change to any of the three credit bureaus and 2) a credit score update from only one bureau on a periodic basis so that you know when your credit standing has changed significantly and thus qualify for lower rates on your loans and even car insurance. Nothing else!
    You should not care about ID theft insurance, or anything else they might try to sell you.
    Our recommendation:     Credit Report, Score, and Monitoring for $8.99 per month -- this is the least expensive service we could find that met our criteria.

 
 
 
 
 
 
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