Credit Monitoring Services: Are They Worth the Cost?
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What is credit monitoring?
Credit monitoring services typically include alerts when a credit application has been made in your name, such as opening a new account or adding an authorized user, and when your credit score or credit report changes.
Other offerings from credit monitoring services may include alerts about large transactions, credit limit increases and changes to personal information such as your address.
The benefit of credit monitoring is that you learn right away if someone is trying to use your data, rather than months or years later, when there is more damage and undoing it is more complicated.
If you learn that your data has been compromised, it doesn't necessarily mean your information has been used by identity thieves. You do, however, face a lifelong risk of identity theft because your data and numbers are out there.
Are credit monitoring services worth it?
That depends on you and how much work you want to put in. You can do your own credit monitoring for free, and even prevent fraud risks by freezing your credit.
Free credit monitoring services
Here are things you can do to protect yourself:
Get a credit freeze, which blocks access to your credit reports. Experts consider this the strongest protection from criminals accessing your credit without permission. You can freeze (and unfreeze) your credit online or with a phone call to the three major credit reporting agencies: Equifax, Experian and TransUnion.
Check the detailed information on your credit reports. You can get free credit reports each week from the three major credit reporting agencies using Annualcreditreport.com. If something is wrong, you can dispute credit report errors.
Look into free credit monitoring that your bank, employer or credit card issuer may offer. Or get your free credit report and monitoring with NerdWallet.
Paid credit monitoring services
Maybe you know you won’t follow through on do-it-yourself monitoring or are willing to pay for extra protection. If you’d feel better paying for credit monitoring, learn what to look for in their service offerings. Seek out services that offer three-bureau credit monitoring and a full suite of theft alerts.
These typically cost more than $200 per year, some more than $300. That expense may make sense if:
You’re already the victim of identity theft or at high risk of it — for instance, if your Social Security number already has been disclosed in a data breach or you’ve lost your Social Security card.
You don’t want to freeze your credit reports.
You know that you won’t monitor your credit.
Before signing up, review the services included, when and how you can cancel, and what your rights are if the service doesn't protect you. Look for a service that specifically promises "three-bureau credit monitoring" — if a service covers only one credit bureau, you’re paying for partial protection.
» We compared them: best identity theft protection services right now
Avoid credit bureaus' products
If you are buying credit monitoring, avoid the offerings from credit bureaus themselves. Here's why:
These may not offer much identity theft coverage, despite costing as much as other companies' offerings.
Credit bureau monitoring plans typically have an arbitration clause in their terms of service. When you sign up, you must waive your right to a class-action lawsuit and agree to binding arbitration, which widely is considered to be against a consumer’s best interests.
The inability to sue is particularly bad in case of a data breach, such as the 2017 Equifax incident, because a credit bureau could fail you in two ways: by not providing adequate monitoring and by failing to safeguard the consumer information it collects on you.
Know the limits of credit monitoring services
Credit monitoring services often market themselves as safeguards of your credit profile. But that’s not quite the case.
Here’s what even the best credit monitoring companies can’t do:
They can’t prevent identity theft or credit card fraud.
They can’t keep you from receiving phishing emails — or from opening them.
They can’t keep someone from applying for credit in your name.
They won’t correct errors on your credit report.
They won’t stop taxpayer identity theft.
While credit monitoring is helpful, proactively blocking access to your credit reports by issuing a credit freeze provides that extra layer of protection.
» Learn how to prevent identity theft
